Volatility, liquidity, trading activity, and the volume of on-chain value transferred by Bitcoin are at historical lows. This increases the likelihood that the market has entered a period of extreme apathy and exhaustion, according to Glassnode.
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… pic.twitter.com/twInh0OqKf
— glassnode (@glassnode) September 11, 2023
From late August, Bitcoin, Ethereum and stablecoins saw a return toward balance and a modest outflow of investor funds. This points to a degree of uncertainty, experts noted.
The aggregate supply of stablecoins, from a peak of $163 billion in April 2022, has fallen by 26%, to about $120 billion. Analysts attributed the dynamics to rising yields on government bonds and a deteriorating crypto market backdrop.
The diagram below shows net inflows to centralized platforms. Inflows of Bitcoin and Ethereum are interpreted as selling pressure; inflows of stablecoins as buying activity.
The graph shows that since April 2022 the aggregated metric has returned to a neutral regime, in line with a slowdown in capital inflows into the two major cryptocurrencies. The market is becoming increasingly apathetic and uncertain, experts stated.
Volatility remains at historically low levels, which could presage significant price swings ahead. The sell-off of digital gold, with the price sliding to $26,000, and Grayscale’s win over the SEC did not fundamentally change the situation.
The daily volume of coins moving from hand to hand, $2.44 billion, remains near the October 2020 lows.
The volume of realized gains and losses is on par with levels seen before the 2020 bull market. Realized value held in the so‑called hot supply sits at historical lows. In other words, there are very few coins older than a week in circulation.
For derivatives markets, trading activity remains tepid.
The daily turnover of Bitcoin futures has fallen to $12 billion (only at the end of 2022 was it lower). In the Bitcoin‑based options market, the metric fell 72% from the ATH, reaching $437 million.
Implied volatility at a one‑month horizon has returned to a historical low of 33.9%.
Against a backdrop of low activity, the share of coins in hodlers’ hands rose to a historical high of 14.74 million BTC, while speculative wallets held 2.46 million BTC—the lowest since 2011.
At the time of writing, the cost basis for 4.81 million BTC ranged from $20,300 to $29,600. Below $26,000, the vast majority of short‑term positions are in the red. At the time of writing, this measure stood at 83.7%.
«One could argue that this state of affairs is somewhat nerve‑wracking for this more price‑sensitive cohort. Many psychological milestones still need to be overcome», analysts explained.
On September 11 Bitcoin tested levels below $25,000.
Earlier, BitMEX co‑founder Arthur Hayes allowed for a possible brief move below $20,000 with the subsequent new bullish impulse.
But in September he pointed topositive prospects for the first cryptocurrency despite the policy of the the Fed.