Since its inception, Bitcoin has (almost) always been the poster child for volatility. Yet, the Bitcoin price is hardly moving in any direction at the moment. But the latest data suggests a surprising twist in the tale.
As per a recent report by on-chain data provider Glassnode, “Bitcoin markets are experiencing an incredibly quiet patch, with several measures of volatility collapsing towards all-time lows.” This raises the question: Are we entering a new era of Bitcoin price stability, or is the market misreading the signs?
Historical Context For The Volatility Of Bitcoin
To truly understand the current state of the market, it’s essential to delve into the historical context. The Glassnode report notes, “It has been 842-days since the bull market peak was set in April 2021.” During this period, Bitcoin’s recovery has been more robust than in previous cycles, trading at -54% below its all-time high (ATH), compared to a historical average of -64%.
Drawing parallels with past cycles, the report highlights that both the 2015-16 and 2019-20 cycles underwent a “6-month period of sideways boredom before the market accelerated above the -54% drawdown level.” This could be indicative of a similar “boredom” phase in the current cycle.
One of the most striking revelations from the Glassnode report is the extreme volatility compression Bitcoin is currently undergoing. “Bitcoin realized volatility ranging from 1-month to 1-year observation windows has fallen dramatically in 2023, reaching multi-year lows.” This is reminiscent of four distinct periods in Bitcoin’s history, including the late stage of the 2015 bear market and the post-March 2020 consolidation following the outbreak of COVID-19.
Following the furious rally at the beginning to 2023, the price performance on both a quarterly and monthly basis has moderated. This mirrors Bitcoin’s previous cycles where the initial surge from the low is robust, but then transitions into a prolonged phase of uneven consolidation, a phase of re-accumulation.
Furthermore, the report states, “The price range which separates the 7-day high and low is just 3.6%. Just 4.8% of all trading days have ever experienced a tighter weekly trade range.” The 30-day price range is even more extreme, constricting price to just a 9.8%, and with only 2.8% of all months in…
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