Bitcoin Volatility Shrinks To All-Time Lows

Some experts joke that the Bitcoin price is so stable at present, they are comparing it with a stablecoin. But, historical data shows that this level of volatility carries significant risk. Glassnode’s report shows that BTC trading is limited to $869 and the difference between weekly high and low by only 4.6%.

Glassnode’s weekly report examines both these bullish and bearish risk factors. Periods of extremely low volatility have been very rare in Bitcoin’s history. There has been either a very strong up- or down move.

Bitcoin Price Case: Bear Case

On the bear side, historically low on-chain usage reveals some parallels to 2018’s bear market.

Since August, there has been a stagnation in the rate of growth for addresses with non-zero balance. Also, USD transfers volume dropped to $19.2billion per day. This was below December 2017, but slightly more than May-July 2021’s lows.

Bitcoinist yesterday reported that miner capitulation poses the greatest intra-market risk. Glassnode claims that the price of hash has dropped to $66.5k/day for each exahash.

This is despite the fact that coin prices are 2x and Hash Price falling to below 2020’s halving levels, which shows just how severe the increase in Hashrate Competition has been.

In addition, Glassnode estimates that miners’ balances have increased 10-fold since 2019 and now total 78.2k BTC, which equates to $1.509 billion at a price of $19.3k.

This explosive combination of miners nearing profitability with an enormous inventory of BTC and thin order books, historical low demand and continuing macroeconomic uncertainty makes for a dynamic mix that must not be overlooked.

Bull Case

But there are strong arguments in favor of a bull. First and foremost, HODLers continue to show very strong conviction and have reached an all-time high in coin ownership while “steadfastly” refusing to put coins on the market.

Cryptocurrency reserves have been steadily shrinking, currently reaching January 2018, while stablecoin buyers are bringing in more than $3 billion per monthly.

Other data on the chain also points to an ongoing period of accumulation. Both smaller investors (< 1 BTC) and whales (up to 10,000 BTC) have changed their behavior to net accumulation and increase.

This is also true for Short-Term Holders. There is a significant increase in the number of coins being passed to new buyers for prices between $18,000-$20,000. Glassnode concluded its bullish thesis with these words:

The current bullish case for Bitcoin is one of unwavering belief and consistent balance growth by the HODLer population. Bitcoins most committed believers are still adamant that liquid coins will continue to flow to exchanges.

BTC trades in a very narrow range at press time.

BTC Bitcoin USD chart
Volatility in Bitcoin is on the rise. Source: TradingView

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