{"id":5437,"date":"2023-01-07T08:00:00","date_gmt":"2023-01-07T08:00:00","guid":{"rendered":"http:\/\/ci02b49bd4500124a2"},"modified":"2025-01-28T14:30:58","modified_gmt":"2025-01-28T14:30:58","slug":"bitcoin-volatility-hits-historic-lows","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/markets\/bitcoin-volatility-hits-historic-lows","title":{"rendered":"Bitcoin Volatility Hits Historic Lows Amid Market Apathy"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p><em>The below is an excerpt from a recent edition of Bitcoin Magazine PRO, <\/em>Bitcoin Magazine&#8217;s<em> premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, <\/em><a href=\"https:\/\/bm.b.tc\/3Wlped5\" target=\"_blank\" rel=\"noopener\"><em>subscribe now<\/em><\/a><em>.<\/em><\/p>\n<p><iframe loading=\"lazy\" height=\"320\" width=\"480\" src=\"https:\/\/bmpro.substack.com\/embed\" frameborder=\"0\" scrolling=\"no\"><\/iframe><\/p>\n<hr>\n<p>As we head into 2023, we want to highlight the latest state of bitcoin\u2019s volume and volatility after a recent wave of capitulation. Last time we touched on these dynamics was in \u201c<a href=\"https:\/\/bmpro.substack.com\/p\/the-bitcoin-ghost-town\" target=\"_blank\" rel=\"noopener\">The Bitcoin Ghost Town<\/a>\u201d in October, where we highlighted that an extremely low volume and low volatility period in bitcoin price, GBTC and the options market was a concerning sign for the next leg lower. This played out in early November.<\/p>\n<p>Fast forward and the trends of declining volume and low volatility are back once again. Although this could be indicative of another leg lower to come in the market, it\u2019s more likely indicative of a complacent and decimated market that few participants want to touch. <\/p>\n<p>Even during the November 2021 capitulation period, there was a historically low period of volatility. Sometimes the most market pain can be felt when having to wait for a clear change in trends. The bitcoin price is providing that pain as we\u2019ve yet to see the type of explosion in market volatility that has defined market pivots and major directional moves in the past.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/spx-bottoms-and-vix-spikes.png\" title=\"\"><\/figure>\n<p>While there are many different ways to define, classify and estimate bitcoin volume in the market, they all show the same thing: September and November 2021 were the peak months of action. Since then, volume in both the spot and perpetual futures markets have been in steady decline.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2025\/01\/bitcoin-volume.png\" title=\"\"><\/figure>\n<p>Overall market depth and liquidity has also taken a major hit after the collapse of FTX and Alameda. Their destruction has led to a large liquidity hole, which is yet to be filled due to the lack of market makers currently in the space.<\/p>\n<p>By far, bitcoin is still the most liquid market of any other cryptocurrency or \u201ctoken,\u201d but it\u2019s still relatively illiquid compared to other capital markets since the whole industry has been crushed over the last few months. Lower market depth and liquidity means assets are prone to more volatile shocks as single, relatively large orders can have a greater impact on market price.&nbsp;<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/aggregated-bitcon-market-depth.png\" title=\"\"><\/figure>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/liquidity-rank-versus-market-cap.png\" title=\"\"><\/figure>\n<h3>On-Chain Apathy<\/h3>\n<p>As expected in the current environment, we\u2019re also seeing more market complacency when looking at on-chain data. Although continuing to rise over time, the number of active addresses \u2014 unique addresses active as either a sender or receiver \u2014 remain fairly stagnant over the last few months. The chart below highlights the 14-day moving average of active addresses falling below the running average over the last year. In previous bull market conditions, we\u2019ve seen growth in active addresses outpace the existing trend fairly significantly.&nbsp;<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoin-active-addresses.png\" title=\"\"><\/figure>\n<p>Since address data has its flaws, looking at Glassnode\u2019s data for active entities shows us the same trend. Overall, bear markets reversing are the result of many factors, including growth in new users and an increase in on-chain activity.&nbsp;<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitoin-active-entities-addresses.png\" title=\"\"><\/figure>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2025\/01\/bitcoin-magazine-pro-banner.jpg\" title=\"\"><\/figure>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoin-transfer-volume-momentum.png\" title=\"\"><\/figure>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoin-seller-exhaustion.png\" title=\"\"><\/figure>\n<p>In our July 11 release \u201c<a href=\"https:\/\/bmpro.substack.com\/p\/when-will-the-bear-market-end\" target=\"_blank\" rel=\"noopener\">When Will The Bear Market End?<\/a>\u201d, we made the case that the brunt of the price-based capitulation had already been felt, while the real pain ahead was in the form of a time-based capitulation.<\/p>\n<blockquote>\n<p>\u201cA look at previous bitcoin bear market cycles shows two distinct phases of capitulation:<\/p>\n<p>\u201cThe first is a price-based capitulation, through a series of sharp selloffs and liquidations, as the asset draws down anywhere from 70 to 90% below previous all-time-high levels.<\/p>\n<p>\u201cThe second phase, and the one that is spoken of far less often, is the time-based capitulation, where the market finally begins to find an equilibrium of supply and demand in a deep trough.\u201d \u2014 <a href=\"https:\/\/bmpro.substack.com\/p\/when-will-the-bear-market-end\" target=\"_blank\" rel=\"noopener\">Bitcoin Magazine PRO<\/a><\/p>\n<\/blockquote>\n<p>We believe time-based capitulation is where we stand today. While exchange rate pressures can certainly intensify over the short term \u2014 given the macroeconomic headwinds that remain \u2014 the conditions that look likely to persist over the short and medium term look to be a sustained period of chop with extremely low levels of volatility that leave both traders and HODLers questioning when volatility and exchange rate appreciation will return.<\/p>\n<hr>\n<p><em>Like this content? <\/em><a href=\"https:\/\/bm.b.tc\/3Wlped5\" target=\"_blank\" rel=\"noopener\"><em>Subscribe now<\/em><\/a><em> to receive PRO articles directly in your inbox.<\/em><\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2025\/01\/bmpro-subscribe-button.png\" title=\"\"><\/figure>\n<h3>Relevant Past Articles:<\/h3>\n<ul>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/the-bitcoin-ghost-town\" target=\"_blank\" rel=\"noopener\">The Bitcoin Ghost Town<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/when-will-the-bear-market-end\" target=\"_blank\" rel=\"noopener\">When Will The Bear Market End?<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/on-chain-data-shows-potential-bottom\" target=\"_blank\" rel=\"noopener\">On-Chain Data Shows \u2018Potential Bottom\u2019 For Bitcoin But Macro Headwinds Remain<\/a><\/li>\n<li><a href=\"https:\/\/bmpro.substack.com\/p\/state-of-the-mining-industry-survival\" target=\"_blank\" rel=\"noopener\">State Of The Mining Industry: Survival Of The Fittest<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The brunt of the price-based capitulation has already been felt, while the real pain ahead is a waiting game for the market to finally turn around.<\/p>\n","protected":false},"author":2736,"featured_media":3125,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[85,1401,991,1741,1679],"class_list":{"0":"post-5437","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-bitcoin-magazine-pro","9":"tag-market-cap","10":"tag-on-chain-analysis","11":"tag-on-chain-data","12":"tag-volatility"},"author_data":{"id":2736,"name":"Dylan Leclair And Sam Rule","nicename":"dylan-leclair-and-sam-rule","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/2b6b26c44e1d269b6e0f99be25243a520901d88fba7899ea664ee1c543b3ff6d?s=96&d=robohash&r=g"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/economic-chart-analysis.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/5437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2736"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=5437"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/5437\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/3125"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=5437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=5437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=5437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}