If you were to chat with cryptocurrency traders this week, you would hear three sentences constantly muttered: “volatility,” “bond prices,” and the potential for Bitcoin to “swing.”



Many analysts have focused on the Bitcoin price movement in a row, leading some to wonder if this is a sign of a bottom in the market or even a breakout from the stock markets.

In their latest Online Week newsletter, The Calm Before the Storm, Glassnode analysts stated:

“Recent weeks have seen an uncharacteristically low level of bitcoin price volatility, in stark contrast to the stock, credit and currency markets where rising central bank interest rates, inflation and a strong US dollar continue to wreak havoc.”
Research firm Delphi Digital also reiterated the idea, citing the Bollinger Bandwidth Percentage (BBWP) ratio as evidence that there could be a “significant move forward for BTC”. According to Delphi Digital, “Historically, BBWP readings above 90 or below 5 indicate major turning points.”

BTC price percentage and Bollinger band bandwidth. Source: Delphi Digital
BBWP is not yet below 5, but researchers note that for Bitcoin:

“Since the second quarter of 2017, BBWP values ​​greater than 90 or less than 5 have resulted in an average increase of 204% or a decrease of -51%.”
While it is too early to conclude that BTC has broken its connection with the stock markets or even bottomed, historical evidence suggests that long periods of sideways price action are characterized by phases of accumulation and distribution.

Related: Bitcoin price has finally moved and fireworks are sure to follow

The Glassnode Accumulation Trend Score, a measure that “reflects the cumulative intensity of changes in the balance of an active investor over the past 30 days,” is currently in neutral territory, indicating a equilibrium state in the Bitcoin accumulation structure.

Bitcoin accumulation trend. Source: glassnode
The report describes how organizations from 2018 to 2019 moved from 1,000 BTC to 10,000 BTC allocating their tokens as the bull market accelerated its pace, while retail investors (below 1 BTC) increased their Bitcoin allocation.

BTC accumulation trend by groups. Source: glassnode
Similar investor behavior can be seen in 2022, when companies selling more than 10,000 bitcoins in a bear market surged to $24,500 before entering accumulation mode at the next lowest price.

As shown in the chart below, BTC holders with large balances (above 10,000 BTC) are now neutral while the BTC pool is accumulating from 1,000 to 10,000 BTC. Meanwhile, retail investors are showing varying degrees of equilibrium and selling.

BTC accumulation trend by groups. Source: glassnode
Where is the volatility?
Bitcoin price has been trading in a range between $18,500 and $24,500 over the past 120 days, and as Cointelegraph noted on October 11, the lack of fireworks could be due to several factors.

There are a number of significant economic events that will occur over the next couple of weeks and this may encourage traders to sit back and watch from the sidelines.

The following events are planned for October:

October 12: FOMC meeting minutes.
October 12: Report on the Consumer Price Index.
October 17: The third quarter reporting season begins.
October 28: Personal Consumer Price Index (PCE).
In addition to the slight rise in the Dow and the S&P 500, stock markets continue to decline, and the intensification of the conflict between Russia and Ukraine, as well as the strengthening of the US dollar, may contribute to alienating investors from risky assets. .

By analyzing the distribution of coins between long- and short-term holders of coins, Glassnode concluded that sellers are likely to exhaust themselves and that more than 31% of coins held by long-term holders lose money. Compared to previous market conditions, the researchers note that:

“The market was in this phase for 1.5 months, the previous cycle was 6-10 months.”
Although it is impossible to predict which direction the bitcoin price will go after volatility increases, examining network data to decipher the actions of market participants in nearly identical market conditions can help investors decide what to do when the price starts to move.

Source: CoinTelegraph