What Bitcoin and Ethereum are signaling about risk appetite in crypto

The Average True Range (ATR) has started to rise, but remains below the range typically associated with panic-driven selling.

Bitcoin has broken below the lower Bollinger Band, indicating a shift in momentum. However, the move has not been accompanied by a sharp rise in ATR. Volatility is picking up, but only modestly.

This suggests the recent selloff reflects position trimming in a low-liquidity environment, rather than panic-driven capitulation.

Ethereum tracks Bitcoin with no sign of decoupling

Ethereum‘s price action closely mirrors Bitcoin’s. ETH also traded inside a narrowing range before breaking lower. Like Bitcoin, it failed to hold key support levels once volatility expanded.

ETH 1-Day Chart, February 5 |Bitcoin Dominance chart, February 5 | Source: Crypto.News

In stronger risk-on phases, declines in Bitcoin often lead to capital rotating into Ethereum and altcoins, pushing dominance lower. That pattern has not emerged. The absence of a sustained drop in dominance points to a defensive posture among traders.

Rather than reallocating within crypto, participants appear to be stepping back altogether.

Taken together, the three charts describe a market in wait-and-see mode. Prices are falling, but without the volatility spikes that typically signal panic. Volatility has expanded, but only from compressed levels. Participation remains thin, and risk appetite remains muted.

Until a clear catalyst emerges, crypto markets are likely to remain cautious, with traders focused more on capital preservation than positioning for the next rally.