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Bitcoin has fallen to a nearly two-month low as risk aversion weighs on the cryptocurrency market.
The largest digital asset by market value dropped as much as 3.1% to lows of $28,230 in today's trading. The decline was the largest intraday since Aug. 1. BTC was down 2.50% in the last 24 hours to $28,399 at the time of writing.
The Bitcoin market has reached a stage of extreme apathy and exhaustion, according to Glassnode, with volatility measures and numerous major on-chain indicators reaching all-time lows.
Volatility is a measure of how much the price of an asset swings over time and is an essential risk indicator on cryptocurrency markets.
This said, Bloomberg senior Macro strategist Mike McGlone evaluates the potential of a big Bitcoin price pump given the fact that volatility measures are at all-time lows.
Are Big Bitcoin Pumps Done? Mainstream, Stablecoin Trajectory - #Bitcoin volatility is declining along with most assets in 2023, and the mainstream migration process is likely to entail diminishing risk for the #crypto -- and limited price-pump potential. Divergent Bitcoin and… pic.twitter.com/h5EH6EwNiL
— Mike McGlone (@mikemcglone11) August 17, 2023
McGlone cites in a short post written in a graphical image that the 180-day volatility for Bitcoin fell to about 46% on Aug. 16 —the lowest ever. Aside from decreasing volatility for both asset classes, he notes that Bitcoin has shown divergent weakness versus the stock index since the end of Q1.
Bearing this in mind, McGlone noted that Bitcoin volatility may recover if the S&P 500 declines. Market volatility typically rises when the S&P 500 retreats, according to the strategist.
The current trend in Bitcoin is its adoption as digital gold, but with volatility roughly three times that of the metal, relative crypto risk or volatility has room to decline. McGlone observed that Bitcoin traded at around 10 times the risk of gold in 2018, demonstrating the cryptocurrency's maturation over the years.
Choppy, sideways market ahead?
The current low volatility seen on the market often entails a relatively weak influx of demand. According to Glassnode, the Realized Cap is climbing, but only very slightly, suggesting a very boring, choppy, sideways market may remain on the road ahead.
On the other hand, the conviction of Bitcoin investors seems to remain impressively high, and very few are willing to liquidate their holdings.
This is as the supply held by Long-Term Holders continues to increase, hitting an ATH of 14.6 million BTC. In direct contrast, Short-term Holder supply has declined to a multi-year low of 2.56 million BTC.
Godfrey Benjamin
Gamza Khanzadaev
Yuri Molchan
