Recently, the Bitcoin markets have been experiencing a significantly stable time. Amid such stable times, several measures of volatility have been collapsing towards all-time lows contributing to the overall low volatility.
In its recent weekly report titled “Volatility Crush,” Glassnode, an on-chain analytics firm, explored how remarkable this quiet period is from a historical standpoint, and then explore how this is being priced into derivatives markets. The report reveals that the current volatility is in tandem with the spot prices.
To this, the report reveals that the Bitcoin spot prices have been trading above a number of long-term moving averages. The report listed the 111 days, 200 days, 365 days and 200 weeks averages which are reportedly widely observed across the industry.
As visible in the graph, these averages range from a low of $23,300 (200DMA) up to $28,500 (111DMA). This chart also highlights similar periods over the past two cycles which tend to align with macro uptrends.
Further, Glassnode analysts suggest that there is a significantly prevalent trend visible across the cost basis for three cohorts. The firm has divided the cohorts into three parts:
- Entire market (the realized price)
- Short-Term Holders (coins younger than 155-day)
- Long-Term Holders (coins older than 155-day)
To this, Glassnode writes that the spot price is again trading above all three models and demonstrates a strong confluence with the classic technical analysis tools above. The graph below shows the results for the three cohorts.
Further, Glassnode refers to the 842-days old bull market peak, which was set in April 2021. Referring to the recent recovery in 2023, analysts suggest that the recovery is faring rather better than the last two cycles, trading -54% below the ATH, compared with -64% historically.
It is worth noting that both the 2015-16 and 2019-20 cycles experienced a 6-month period of sideways boredom before the market accelerated above the -54% drawdown level. Hence, this could perhaps be an indication of the boredom which may lie ahead.
As reported by Todayq News Bitcoin realized volatility ranging from 1-month to 1-year observation windows has fallen dramatically in 2023, reaching multi-year low values. The 1 year volatility window is now at levels not achieved since December 2016. Further, based on the previous historic lows as this is the fourth such period of extreme volatility compression, Glassnode makes few observations:
- The late stage of 2015 bear market into the 2016 re-accumulation period.
- The late stage 2018 bear which preceded a 50% sell-off in Nov. This was however followed by the Apr 2019 recovery rally, rising from $4k to $14k over three months.
- Post March 2020 consolidation as the world adjusted to the outbreak of COVID-19.
- The 2022 end of year break as the market digested the FTX failure, and our current market.
Simultaneously, it is worth noting that the price range separating the 7-day high and low is one of the tightest at just 3.6%. Towards the conclusion, the report states that Bitcoin has emerged as a price-stable and non-volatile with its recent trails. Reportedly, the market is arguably the least volatile it has ever been, calling into question whether heightened volatility is indeed ahead.
Amid such low volatility periods, despite the slight slide in prices, the asset’s network growth and long-term holder supply have continued to paint an optimistic picture for Bitcoin. As of writing, Bitcoin is trading at $29,169.90, a 0.03% percent decline over the past day and 0.03% decline over the past 5 days.