Bitcoin (BTC) price consolidation over the past few weeks seems like an endless wait for investors as volatility has bottomed. As BTC price continues to fluctuate in the $29,000-$30,000 range, several on-chain indicators have reached a state of extreme apathy and exhaustion.
Let’s take a look at some of the on-chain indicators that suggest there isn’t enough ammunition for further price increases.
Bitcoin is seeing modest inflows
The realized cap is an important tool in on-chain analysis and reflects the total capital inflow since inception. The size and rate of change of the realized cap provide valuable insights, showing that over $16 billion (+4.1%) has flown into Bitcoin this year.
Still, the rise appears to be gradual compared to the sharp rise observed in the 2021-22 uptrend. This suggests that the inflow of capital is relatively slow.
Courtesy Glassnode
Bitcoin volatility compression
Bitcoin Bollinger Bands suggest that Bitcoin volatility has dropped to historic lows. The upper and lower Bollinger Bands are only 2.9% apart, so this low volatility compression has only been seen twice, namely in 2016 and January 2023.
Courtesy Glassnode
Another way to understand the reduction in volatility (investor exhaustion) is to look at how investors spend their coins. The realized value serves as a measure in this context:
- High volatility: When volatility is high, investors tend to spend coins they acquired at prices much higher (leading to losses) or much lower (leading to gains) than the current spot rate.
- Low volatility and exhaustion: During periods of low volatility (when investors are exhausted), most of the coins moving on the chain were likely acquired at prices very close to the current spot rate. This means that the realized gain or loss is minimal.
The sell-side risk ratio is a helpful tool to track this. It compares the absolute value of the realized gain or loss (the change in asset) to the realized cap (the total asset). For short-term holders (STHs), this ratio is currently at an all-time low.
This suggests that nearly all investors looking to take profits or losses in this price range have already done so. As such, the market may need a catalyst to encourage new spending, potentially portending volatility ahead, reports Glassnode.
Offer to bitcoin long-term holders
The amount of Bitcoin held by long-term holders is steadily increasing, reaching a record 14.6 million BTC. In contrast, supply held by short-term holders has fallen to a multi-year low of 2.56 million BTC.
In summary, this suggests that bitcoin investors remain invested in bitcoin as very few choose to sell their holdings.
Courtesy Glassnode
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