In the world of Bitcoin, silence is not always golden. The recent weeks have seen Bitcoin’s price volatility drop to historical lows, with the BTC price trading mostly between $29,000 and $30,000. However, beneath this placid surface, a number of intriguing market dynamics are at play.
“Realized volatility for Bitcoin has collapsed to historical lows. Across 1-month to 1yr timeframes, this is the quietest we have seen the corn since after March 2020. Historically, such low volatility aligns with the post-bear-market hangover periods (re-accumulation phase),” stated Checkmate, lead on-chain analyst at Glassnode.
The chart shared by Checkmate shows that annualized realized volatility resembles the post-bear era for Bitcoin from March 2020 when volatility was at 47%. Currently, 1-year volatility sits at 49.1%, 3-month volatility at 35.5%, and 1-month volatility at 22.9%.
Quit Before The Storm For Bitcoin
However, the low volatility is not the only story. Checkmate also highlighted a new all-time high for Bitcoin’s long-term holder supply, now at 14.59M BTC, which accounts for 75% of the circulating supply. This shows that an increasingly high number of Bitcoin investors are convinced of a future rally, leading to a supply shortage, while high risk traders are washed out of the market due to lacking volatility.
Simultaneously, there’s a surge in institutional positioning; volume and open interest of the CME Bitcoin futures have reached a 20-month high in July. Despite the Bitcoin spot markets recording low volumes, the CME futures saw the highest volume since January 2022, with $55.8 billion in July.
The CTFC data reveals a fascinating slugfest between two investor groups. Asset managers are $1.2 billion net long, while hedge funds are net short by -$980 million. This standoff suggests an imminent breakout in Bitcoin’s price, potentially leaving one of these groups with burnt fingers.
On-chain analyst Ali Martinez provided further insight: “Even as Bitcoin dropped from $32,000 to $29,000, the number of new BTC addresses steadily rose! This bullish divergence between price and network growth hints at a stable long-term BTC uptrend. Buy the dip!”
Indeed, the current low volatility phase is not without precedent or predictive power. Renowned analyst @CryptoCon provides a compelling perspective on this,…
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