Bitcoin Volatility Hits a Historic Low in the Face of Market Apathy

Bitcoin Magazine ProThe majority of the price-based capitulation is already felt. The real pain ahead, however, is a waiting for the market’s turn around. Subscribe now to get these insights and other on-chain analysis of the bitcoin market straight to your inbox. These dynamics were last discussed in “The Bitcoin Ghost Town” October. We highlighted that a low volume and low volatility period for bitcoin price, GBTC, and the options market was a worrying sign for the next leg lower. This was seen in November. Fast forward, and the trend of low volatility and declining volume is back. This could indicate that the market will continue to slide, but it is more likely to be indicative of a market that is complacent and depressed. Even during the capitulation period in November 2021, volatility was historically low. Market pain is often felt when there is no clear trend change. The bitcoin price is causing that pain, as we have yet to see the kind of market volatility that has defined pivots and major directional moves. The spot and perpetual futures market volumes have been steadily declining since then. Their demise has created a large liquidity gap, which is still being filled by market makers. Market liquidity and market depth are lower, which makes assets more vulnerable to volatile shocks. Larger orders can have a greater effect on market price. Source: Kaiko Q4 reportOn-Chain complacency is also a common occurrence in today’s environment. While the number of active addresses, unique addresses that are active as either a receiver or sender, is on the rise, it has remained relatively stagnant in the last few months. Below is a chart that shows the 14-day moving mean of active addresses falling below its running average for the past year. In bull market conditions in the past, we have seen active addresses grow significantly faster than the trend. Moving averages for active bitcoin addresses. Address data is not perfect, so we can see the same trend in Glassnode’s data on active entities. Bear markets that reverse are generally caused by many factors, such as growth in new users and an increase of on-chain activity. Moving averages of active Bitcoin entitiesBitcoin transaction volume momentumBitcoin sellers exhaustion levelsIn our July 11 publication “When will the bear market end? We argued that the price-based capitulation was already felt and that the real pain was ahead in the form a time-based capitulation. “A look at past bitcoin bear market cycles reveals two distinct phases. The first is a price-basedcapitulation. This involves a series of sharp sales and liquidations as the asset drops anywhere from 70 to 90 percent below its previous all-time highs. The second phase, which is less frequently mentioned, is the time-based capitulation. This is when the market finally finds an equilibrium between supply and demand at a deep trough. We believe that time-based capitulation is the best way to see where we are today. We believe that time-based capitulation is the best way to go. Subscribe now to receive PRO articles directly in your inbox.Relevant Past Articles:The Bitcoin Ghost TownWhen Will The Bear Market End?On-Chain Data Shows ‘Potential Bottom’ For Bitcoin But Macro Headwinds RemainState Of The Mining Industry: Survival Of The FittestTagsterms:On-chain DataMarket capVolatilityOn-chain Analysis

 

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