- Bitcoin volatility has dropped to levels last seen in July 2020. Historical trends suggest a strong rally ahead.
- Since the start of August, the Bitcoin address activity is once again picking up reaching a new 3.5-month high.
The world’s largest cryptocurrency Bitcoin (BTC) has entered strong consolidation over the last few weeks and is currently resting around at $29,000 levels. Interestingly, the Bitcoin price volatility has dropped to a 3-year low at levels last seen in July 2020.
As per historical charts, in 8 out of 9 times volatility was this low we saw expansion to the upside. The one time that we didn’t was after 6 months of consolidation that followed the 2017 parabolic blow-off top.
$BTC realized volatility has not been this low since July 2020. This chart highlights every time vol reached a 25 handle (or lower) since 2015 pic.twitter.com/c64Z5Y07iK
— Alex Krüger (@krugermacro) July 31, 2023
According to the crypto analytics group K33, the largest cryptocurrency has been trading in a tight range over the past six weeks, seemingly unaffected by macroeconomic and industry events that would have typically influenced investors in the past. However, based on historical patterns, it is expected to enter more volatile periods ahead. K33 Senior Analyst Vetle Lunde wrote:
“A deep crypto sleep tends to be followed by a violent wake-up. The market is clearly in an unprecedented stable stage, which has typically acted as a massive pressure valve for volatility once it finally reignites.My short-term thesis is that the market’s volatility pressure is about to climax and that an eruption is near.”
Bitcoin Strong Hands And Boost In Address Activity
Amid all the developments in the market over the last two years, Bitcoin’s long-term holders have continued to hold strongly. As per the on-chain data from Glassnode, nearly 55% of the BTC supply hasn’t moved in two years.
#Bitcoin | 55% of the circulating $BTC supply hasn't moved in two years!
That's a testament to long-term #BTC holders standing firm in their belief. We're in it for the long haul! pic.twitter.com/f523xa54dh
— Ali (@ali_charts) August 2, 2023
On the other hand, after a dull July, the Bitcoin address activity is once again picking up in August and has reached a 3.5-month high. The rise in utility, coupled with significant loss transactions and negative sentiment, strongly suggests that a short-term (at least) price bounce for Bitcoin ($BTC) is more likely, reports Santiment.
📈 #Bitcoin's address activity has surged to its highest level in 3.5 months in August. This utility increase, combined with major loss transactions & negative sentiment, is a strong sign that a short-term (at minimum) $BTC price bounce is more probable. https://t.co/5PzjYROX5T pic.twitter.com/G2tevAWdSM
— Santiment (@santimentfeed) August 3, 2023
Also, the Bitcoin whale accumulation has been going strong over the past few months. Currently, there are 15,870 Bitcoin addresses that possess a minimum of 100 BTC. Together, these large holders, often referred to as whales, own a total of 11.5 million BTC, accounting for over half of the total supply (59.2%). In the past 12 weeks, their combined share has increased by 27,755 BTC.
Bitcoin Is Missing Fresh Capital
The application of the spot Bitcoin ETF by BlackRock led to a strong surge in the BTC price. However, after the initial euphoria, liquidity hasn’t followed up much. But as the outlook turns more optimistic going ahead, there would be a shift in the conditions leading to an inflow of new users and capital.
Brent Xu, the CEO and co-founder of Web3 bond-market platform Umee, stated in an email to CoinDesk that crypto prices are not expected to rise significantly for a long time “until the overall economic conditions improve.” This includes a halt in the practice of raising interest rates, which has been a consistent policy of central banks for over 16 months. Xu wrote:
“We are certainly close to peak rates, though we could have another hike or two ahead of us depending on how sticky inflation actually is. I’m not convinced inflation is falling as fast as many are hoping. In short, we have a long way to go before we enter the optimistic phase of the cycle.”
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