Crypto and Bitcoin markets are heading for a lull period if the on-chain activity is anything to go by. In its last weekly on-chain report for the year, analytics provider Glassnode reported that Bitcoin annualized realized volatility has been the lowest since October 2020.
The metric matches similar low volatility levels at the previous cycle bottom in late 2018.
- Futures volumes are also severely depressed at multi-year lows, it stated, adding:
“This shows the massive impact of tightening liquidity, widespread deleveraging, and the impairment of many lending and trading desks in the space.”
- The FTX implosion has doused the fires of futures markets, and open interest (OI) has slumped as a result. OI is a measure of the number of futures or options contracts that are held by traders and investors in active or open positions.
- Leverage ratios have also fallen, which is generally a good thing for crypto markets as most of the leveraged positions have been flushed out. What remains are hodlers and investors, not speculators and margin traders.
- Since the record realized profit at the peak of the 2021 bull market, there have been $213 billion in realized losses. This equates to 46.8% of the bull profits, a very similar figure to the 2018 bear market, which saw 47.9% in returned realized losses.
- However, the long-term holder supply has reached an all-time high of 13.9 million BTC.
“Despite these spectacularly large losses, the age of the coin supply, and propensity for HODLing by those who remain continues to rise.”
- Glassnode concluded with what we already know: 2022 was a brutal year. It has driven volatility and volumes to multi-year lows as liquidity and speculation dries up, it added.
- However, “investors appear to be stepping in with increasing coin volume on each price leg down,” it stated.