The digital gold market has reached a stage of extreme apathy and exhaustion, with volatility readings at an all-time low. This is the conclusion made by Glassnode analysts.
In support of their words, the experts pointed to the reduction in the spread of Bollinger bands to 2.9%.
Lower values have only been observed twice in history:
- in September 2016, when quotes were $604 before the start of the bull market;
- in January 2023, when the price was trading in the $52 range at $16,800.
Liquidity compression (“depletion” of investors) can also be illustrated through on-chain spending through the realized value indicator.
The low volatility in this case reflects a situation where the cost of acquiring most coins moving on the blockchain is very close to the spot price. For this reason, realized gains and losses are relatively small.
The ideal tool to monitor this is the Sell-Side Risk Ratio, which compares the absolute value of the realized profit loss (asset valuation change) to the realized capitalization (asset valuation).
To date, this metric in relation to speculators has fallen to a near-record low. Only 27 trading days throughout history (0.57%) have lower readings.
“This indicates that all investors who were looking to take profits or losses in this price range have done so. The market must take steps to motivate new spending (a harbinger of impending volatility),” experts explained.
The Sell-Side Risk Ratio of hodlers is also close to record low levels – only 44 trading days in history (1.1%) were lower.
“It can be concluded that volatility and rising prices (in either direction) are necessary to break the “spell” of apathy and exhaust investors”, — analysts specified.
Since the beginning of the year, $16 billion (+4.1%) has flowed into bitcoin based on the realized capitalization indicator. Compared to 2021-2022, these are extremely modest values, which can also explain the low volatility in the market.
After decomposing the indicator mentioned above, analysts determined that the cost of acquiring bitcoins in relation to speculators is $28,600, in relation to hodlers – $20,300, which corresponds to the indicator for these two categories of market participants.
Analysts emphasized that short-term investors, on average, purchased the coins at a relatively high price.
The URPD indicator, which shows the structure of realized price levels in the context of UTXO, shows that speculators mostly formed their positions in the range of $25,000 to $31,000.
“On the scale of the big picture, this distribution of supply is reminiscent of similar bear phase recovery periods in the past. However, on a shorter time frame, it can be argued that this is a slightly “overloaded” market, and many price-sensitive investors are at risk of incurring unrealized losses.” experts explained.
Analysts also drew attention to a further increase in coins at the disposal of hodlers (14.6 million BTC). The indicator for speculators fell to a multi-year low of 2.56 million BTC.
“This speaks to the continued impressively high conviction of bitcoin investors. Very few are willing to liquidate their assets.” experts concluded.
Recall that the 30-day volatility of bitcoin in annual terms dropped to 15.5% – the lowest value in history.
Earlier, Bloomberg analyst James Seyffart increased the chances of approval of an exchange-traded fund based on the first cryptocurrency to 65%.
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