If you’re going to linger this week for cryptocurrency traders, you’ll hear three recurring phrases: “volatility,” “bond prices,” and the possibility of a “sharp move” in bitcoin.
BTC
Many analysts have focused on Bitcoin’s price action in a row, leading some to wonder if this is a sign of a market bottom or even a breakout from the stock markets.
In The Week On-chain’s latest 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 equity, credit and currency markets where rising central bank interest rates, inflation and a strong US dollar continue to wreak havoc.”
Research firm Delphi Digital has also weighed in, identifying the Bollinger Band Width Percentile (BBWP) as evidence that it could be “a significant move for BTC.” According to Delphi Digital, “Historically, BBWP readings above 90 or below 5 have identified key turning points.”
BTC Price and Bollinger Bandwidth Percentile. Source: Delphi Digital
The BBWP has yet to go below 5, but the researchers note that for Bitcoin:
“Since the second quarter of 2017, BBWP readings above 90 or below 5 have resulted in an average increase of 204% or a decrease of -51%.”
While it is premature to conclude that BTC has broken its connection with the stock markets or even bottomed out, historical data shows that long periods of sideways price movement are characterized by phases of accumulation and distribution.
Related: Bitcoin price finally reversed, fireworks definitely to follow
Glassnode’s Accumulation Trend Indicator, a measure that “reflects the cumulative intensity of active investors’ balance changes over the past 30 days,” is currently in neutral territory, indicating an equilibrium state of Bitcoin’s accumulation structure.
The result of the BTC accumulation trend. Source: glassnode
The report details how from 2018 to 2019, organizations from 1,000 BTC to 10,000 BTC tended to distribute their tokens as the bull market accelerated, while retail investors (less than 1 BTC) increased their Bitcoin distribution.
The result of the BTC accumulation trend by group. Source: glassnode
Similar investor behavior can be seen in 2022, with companies holding over 10,000 bitcoins in a bear market rising to $24,500 before entering accumulation mode at the second lowest price.
As shown in the chart below, the BTC owners with the largest balance (over 10,000 BTC) are now neutral, while the BTC pool of 1,000 to 10,000 BTC is piling up. Meanwhile, retail investors are showing varying degrees of balance and selling.
The result of the BTC accumulation trend by group. Source: glassnode
Where are the vibrations?
The price of bitcoin has traded in a range of $18,500 to $24,500 over the past 120 days, and as Cointelegraph reported on October 11, the lack of fireworks could be due to several factors.
A number of key economic developments are slated for the next two weeks, which could encourage traders to sit back and watch from the sidelines.
The following events are planned for October:
October 12: FOMC minutes
12 October: Report for the consumer price index (CPI).
17 October: Start of the reporting season for the 3rd quarter.
October 28: PCE price index
In addition to a slight recovery in the Dow and S&P 500, equity markets continue to trend lower, and the worsening conflict between Russia and Ukraine, as well as the strengthening of the US dollar, may alienate investors from riskier assets. .
By analyzing the distribution of coins between long-term and short-term coin holders, Glassnode concluded that sellers are likely exhausted and more than 31% of coins held by long-term coin holders are losing money. The researchers note that compared to past market conditions:
“The market was in this phase for 1.5 months, and the previous cycle lasted 6-10 months.”
