Bitcoin (BTC) Enters Another Low Volatility Phase; What Should Investors Expect?
- Bitcoin price seems primed for another inactivity phase.
- Why is BTC demand failing to manifest massively despite the current discounted price?
Bitcoin saw a low volatility period in September. This phase witnessed restricted price action and low demand. Meanwhile, the asset’s performance following last week’s slump shows Bitcoin could be traversing another low-volatility period.
The latest analysis from Glassnode shows BTC transaction volume plummeted to a 14-month low recently. That indicated FUD’s return to the marketplace following the previous week’s market-wide crash. Moreover, that might confirm subsided recovery hopes despite the uptrends witnessed during September’s final sessions.
Bitcoin price often rebounds after a massive crash. The leading cryptocurrency attempted a revival ally after bottom during the recent crash though subsequent surges remained restricted. Since then, the asset’s price has resorted to the lower ranges. Also, Glassnode indicated that BTC’s average coin dormancy hit nine-month highs.
The dormancy shows a slowed rate at which BTC exchanged hands. As anticipated, that indicates Bitcoin’s price moves, whose actions have stayed restricted over the past few days. This bias is reminiscent of BTC’s price during September’s final two weeks and the first fourteen days of October.
Also, the subdued price movements reflect an absence of relative strength. Moreover, it confirms the weakness that the Relative Strength Index highlighted with sideways performance. The MFI (Money Flow Index) displayed a lack of substantial sell or buy pressure.
BTC Holder Confidence Yet to Significantly Recovery
The current scenario remains unusual since BTC’s exchange has dipped to four-week lows, regardless of the increased dormancy. That’s because most Bitcoin holders moved their money out of crypto exchanges sending it to private wallets.
That confirms lower exchange balances don’t mean soaring demand. As mentioned above, institutions and whales haven’t shown massive demand, regardless of discounted prices. That has welcomed faded bullish strength within the marketplace.
The absence of demand also showed within the derivatives marketplace. Enormous market slumps like last week often catalyze heightened buybacks. That’s the scenario in the derivatives marketplace.
Nevertheless, the futures open interest index suggested weakened demand in the derivatives space. Also, leveraged positions noted plunges, an anticipated outcome following the latest massive liquidations.
The Bitcoin futures predicted leverage ratio indicated low implementations of leveraged BTC positions. Derivatives market demand & high demand often trigger more volatility. The above-discussed facets strengthen the faded volatility tale.
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