Bitcoin Volatility: Is accumulation and low volatility the last stages before a big market move?

bitcoin volatilityNothing happens: Is low volatility the last stage before a big market move?

In this post:

  • Bitcoin (BTC) volatility goes down further despite signs of on-chain demand.
  • BTC purchases may be happening on OTC markets based on ETF demand.
  • Altcoins struggle to launch a rally, and traders abandon older assets in the move to meme tokens.

Low volatility affects Bitcoin (BTC) and some of the most high-visibility tokens. The current low volatility in Bitcoin is seen as a sign of accumulation and the precursor to a bigger market move. 

Bitcoin volatility is at a historic low, and it has been trending downward since 2020. Even with the two biggest bull markets, BTC prices remain more predictable. Higher liquidity and holding behaviors explain the low fluctuation. The higher price is also harder to move, indicating the market’s maturity. 

The BTC volatility index is down to 1.47%, sliding from 1.93% in the past 90 days. The low volatility combines with significant trading volumes, at a baseline of $26B in 24 hours. BTC trading volumes expanded since the start of 2024, boosted by new inflows of Tether (USDT).

In the short term, BTC’s stagnation under the $72,000 level is causing some questioning. In June, the Bitcoin narrative is leading again, with multiple positive news and signs of whale accumulation. For that reason, the feeling of “nothing happens” may lead to a more significant price move.

Read: Bitcoin ETFs Make 56% of Fidelity’s and 26% of BlackRock’s 2024 Inflows

Crypto markets have also shown that significant price moves happen on a limited number of days, while periods of sideways movement now take longer. While the 2022 bear market ended at a higher baseline, it also extended for the longest at 490 days.

The behavior of BTC recalls previous periods of accumulation and almost no price movement. This time, on-chain activity and mining indicate a busy network. The Bitcoin DeFi summer is only a partial success. Traders also monitor possible hidden behaviors and whale accumulation before a bigger move. 

With more than 90% of all buyers in the money, even smaller holders have no incentive to sell. The Bitcoin fear and greed index signals “greed” with a value of 77 points, also showing buying behavior. 

However, OTC desks may be holding enough BTC to sell to whales, without affecting the market price directly. In May, data showed OTC desks were well-supplied, able to prevent buying from the open market. 

This gives the Bitcoin market a “wait and see” attitude, while expecting a larger price move and a continuation of the bull market. 

In the short term, accumulation may continue and prevent an immediate summer rally. Most of the accumulation may be coming from ETF wallets. Selling on the OTC markets gets inflows from other whale wallets and miners. 

At current prices, miners also decided to offload their coins after months of accumulation during the 490-day stagnation. For some analysts, big price moves may happen once the transfer of wealth is completed. 

Altcoins slow down, failing to provide mass rally

Altcoins face a similar stagnation, as 2024 is about niche stories rather than an all-market rally. Dogecoin (DOGE) has remained stagnant in low volumes for months, despite the meme trend. 

Older assets like Litecoin (LTC), Ethereum Classic (ETC), VeChain (VET) and previous bull cycle stars are stagnating after making their gains in Q1. Altcoins also have to reverse the trend of BTC price dominance, which reached a local peak in the past months. 

Also read: Top Altcoins To Watch in June 2024 As VanEck CEO Predicts Bitcoin’s Meteoric Rise To Rival Gold

A trend reversal of BTC’s dominance may expand demand for altcoins. However, Bitcoin has mostly decoupled, boosted by maximalist money inflows, which may not move into riskier altcoin markets.

The only respite in Q2 came from meme tokens, which ran social media campaigns to encourage holding and “eating a zero”. In 2024, meme tokens outperformed all narratives, though their real returns may be lower based on volatility and corrections. There is some optimism about altcoins, as their performance resembles previous bull markets. 

Altcoins are also waiting to gain attention after many new applications launched in 2024. The rise of Ordinals, BRC-20 tokens, and Runes had its own hype run. Crypto natives also abandoned older projects that did not provide short-term gains in favor of more dynamic assets. 

More significant altcoins with a longer history may hope to be adopted as ETFs, gaining similar attention to BTC.

Cryptopolitan reporting by Hristina Vasileva

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Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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