Get Ready for Some Action as Bitcoin Volatility Hits Historical Lows
Markets are boring right now, with not much going on.
Bitcoin is stuck around $10,700, while altcoins are oscillating between red and greens.
Basically, “all markets, including our beloved digital asset space, seem to be going nowhere fast,” said analyst Mati Greenspan.
After having a blast for about half of the year, even stocks are uncertain thanks to the upcoming elections next month.
September was actually marred with worst monthly performance since March as the broader digital assets market and equities all closed in losses. But according to Greenspan,
“Stocks remain overvalued because there's too much money in the system that needs a home, and the lower-risk alternatives are no longer attractive.”
While the leading digital asset ended Sept. and opened October both on a negative note, at least for the S&P 500, there were some gains.
While the risk-asset rally may have legs still in this last quarter of 2020, for bitcoin, it might be time to make up for all the losses and move towards beating the 2019 high of $14,000.
“Q4 is where BTC typically makes most if its gains during bull markets. I don't think this year will be an exception,” stated one crypto trader.
On a Downtrend
While the price isn’t doing anything, for some time now, trading volume has been the one that’s been really disappointing. Bitcoin volume, which is on a downwards trend actually hit the lowest since late February on Saturday.
“The volatility in the market is back at historical lows, and it is not unlikely that we get some more action in the market soon,” noted Arcane Research.
The 180-day volatility has fallen to a two-year low, but according to on-chain analyst Willy Woo it actually spells “bullish.”
“When volatility is at a minimum, it means trade volumes are at a low, which means exchange fees revenue are at lows, which means exchanges sell less BTC profits to fiat, which mean investor buy pressure dominates the next move,” he explained.
Bollinger Band Width has never been more narrow.
Volatility incoming? pic.twitter.com/JTc7OYqbU4
— Nunya Bizniz (@Pladizow) October 5, 2020
Volatility reaching low also means buyers have laid down a floor on spot markets as they continue to accumulate, which ultimately leads to accumulation bottoms as “this stops downward moves and lowers volatility,” added Woo.
However, what’s worth noting is that when BVOL (30-day realized volatility) hit its lowest in 2018, it was followed by the start of the 50% November crash.
Volatility will be coming if not in the near term, then the less than a month away US Presidential elections will surely get the ball rolling.
On an Uptrend
Several indicators, meanwhile, are painting a bullish picture.
To start with, “The Market Cap to Thermocap Ratio suggests that Bitcoin has massive room to grow from here. It has not even started to show the sharp increase that is typical in bull markets. Current levels are a whole order of magnitude away from previous BTC tops,” as per Glassnode.
Thermo cap is the aggregate amount of bitcoins paid to miners, which serve as a proxy metric to the true capital flow into the Bitcoin network.
Bitcoin addresses are also telling a bullish story, moving away from the usual norm of 5-10k new BTC addresses per day; last week, it grew to its highest level in over two years, peaking above 22k.
Not to mention, Tether’s market cap is ready to burst through $16 billion as well, just three and a half months after hitting $10 billion.