According to recent data from Glassnode, an on-chain analytics firm, while Bitcoin’s volatility has been low, the accumulation has been continuing. Data suggests that implied volatility, a metric that captures the market’s view of the likelihood of changes in a given asset’s price, has touched low levels for Bitcoin recently.
As per data, implied volatility across option contracts from 1-week, to 6-months out have also reached a cycle lows. The graph below reveals that near-term 1-week implied volatility is at the second lowest value (36%) on record, whilst 3-month and 6-month contracts are at all-time-lows of 42% and 46%, respectively.
While the volatility lows suggest stability in the phase of overturning market due to the regulatory crackdown in the United States, the profit and loss taking events have declined to cycle lows. Recently, the absolute value of profit and loss taking events has declined to cycle lows of $268 million.
Notably, the current levels have returned to October 2020 levels (when Bitcoin prices were around $10,000), highlighting just how quiet capital flows have been both in and out of the asset class year to date. In turn, the hodlers are continuously accumulating the asset at a rapid rate of around 42,200 Bitcoins per month.
This suggests that the price insensitive class is absorbing a non-trivial portion of the currently available supply. Analysts suggest that the current trend when compared to the previous cycles suggest a regime of steady and gradual accumulation commenced just over 2-years ago, and suggests that another 6 to 12-months may be ahead of us.
Additionally, this observation is further supported by the divergence between exchange balances, and the volume of coins held in illiquid wallets, being those with little to no history of spending. Illiquid supply reached a new all time high of 15.2 million Bitcoin this week, whilst exchange balances have fallen to the lowest levels since Jan 2018 at 2.3 million Bitcoin.
Glassnode also says that around 146000 Bitcoins per month are currently flowing into these illiquid wallets, supporting the case for a gradual and steady accumulation taking place. This data also adds more clarity to the previous trend reported by Todayq News wherein the Bitcoin highly-liquid supply has been declining.
Additionally, entities with a balance under 100 Bitcoins are increasing their holdings meaningfully, absorbing an equivalent to 254% of mined supply over the last month. Simultaneously, shark entities (100 to 1000 Bitcoin) are also seeing positive balance change, absorbing volumes equivalent to 36% of mined supply.
On the other hand, whale entities (more than 1000 Bitcoin) join miners as net distributors, releasing a volume equivalent to 70% of the mined supply from their holdings. Overall, the market appears to be in a period of quiet accumulation, which suggests an undercurrent of demand, despite the regulatory headwinds that occurred recently.
Concluding the weekly analysis, Glassnode says that across most measures of market energy, digital asset markets are displaying excitement in few of them. Volatility, volumes, and realized value are all at multi-year lows, as liquidity and excitement give way to investor apathy.
However, the classic pattern of wealth transfer towards the price insensitive hodler cohort remains uninterrupted. If past cycles are any guide, it suggests that a period of apathetic sideways boredom may well define the road ahead, potentially lasting between 8 to 18-months in duration.
Notably, the volatility has maintained low levels in the past weeks and the events ahead would shape the future course of Bitcoin’s price action. As of writing, Bitcoin is changing hands at $26,785.60, about a 0.19% decline over the past day and about a 4% surge over the past five days.