Bitcoin’s Recent Calmness Hints at Potential Surges of Volatility Ahead, Suggests Glassnode Analysis

The Bitcoin Market Stagnates as Uncertainty Takes Hold

After a period of significant capital inflows earlier this year, the Bitcoin market has experienced a shift towards neutral or negative inflows in recent months. This suggests a period of stagnation as uncertainty permeates the asset class.

According to blockchain intelligence platform Glassnode, the market has been relatively neutral since April, with a slowdown in Bitcoin and Ethereum capital inflows. This reflects a growing sense of apathy and uncertainty among investors.

Heightened Volatility May Be on the Horizon

Despite recent bouts of volatility, including a drop to $26,000 and Grayscale’s victory against the US Securities and Exchange Commission, realized volatility has remained surprisingly low.

“Liquidity across the digital asset market continues to dry up, with both on-chain and off-chain volumes reaching historical lows. Whilst HODLing remains the market preference, a significant proportion of the supply is teetering on the edge of falling into a significant unrealized loss.”

Glassnode’s analysis indicates that the market is currently experiencing historically low volatility. This is also evident in Bitcoin network settlement volumes, which have returned to October 2020 levels, with a daily USD volume of BTC changing hands hovering around $2.44 billion.

Most coins being traded are maintaining similar prices to when they were acquired, resulting in minimal profits or losses. Realized Profit and Loss levels mirror those of the 2020 market, indicating that the excitement and excessive optimism from the 2021 bull market have likely dissipated.

However, periods of low volatility often precede periods of higher volatility in financial markets. Glassnode’s report suggests that the current market conditions could be a “precursor to heightened volatility down the road.”

Long-Term HODLers Show Resilience

As the market remains exceptionally quiet both on- and off-chain, the supply held by the Long-Term Holder cohort has reached a new peak of 14.74 million BTC.

On the other hand, the Short-Term Holder cohort, representing the more active portion of the market, has seen its supply plunge to the lowest level since 2011.


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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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