Since reaching a high of $69,000 in November last year, Bitcoin’s (BTC) value has dropped 70%. Since numerous industry titans, Celsius Network, Three Directions Capital, and Terra, among others, have collapsed beneath the pressure of the market crash, the current economic crash may look more savage than prior ones. Nevertheless, there is a bright side.
CryptoCompare, a data source, reports that equally few and big buyers have routinely purchased cryptocurrencies on price declines, in contrast to the ongoing selling observed during prior bear markets from December 2017 through December 2018, as well as November 2013 through November 2014. From historic highs, bitcoin fell more than 80% in each bear market.
In contrast to the previous bear market, when all holders across all purse sizes were panic-selling, the company’s monthly statement, which was made public on Thursday, stated that “in this bad market, we have noticed a continual building in practically all portfolios.”
New addresses holding 10,000 BTC
Since September 20, nine new addresses holding 10,000 BTC to 100,000 BTC have been established, according to data from blockchain analytics company Santiment. In just seven weeks, these addresses have purchased 190,000 BTC, totaling $3.8 billion.
Researchers and traders frequently use wallets or email measures to monitor shifts in availability and demand. On-chain data has its limits, and it might be difficult to draw firm conclusions about market behavior from it.
A user/exchange can manage numerous addresses, for instance. In other words, new investment is represented by only some new addresses. Crypto exchanges frequently store user funds across many addresses.
The recent market downturn has resulted in a drop in bitcoin fluctuation, another encouraging development. Over the last 12 months, the annualized realized volatility has averaged 63%. Compared to CryptoCompare, that is less than the 79% median recorded throughout the last down market.
Realized volatility counts how much a security’s price has changed each day over a specific time frame. It is the opposite of implied volatility, a measure used in the options market to reflect traders’ predictions of price volatility in the days, weeks, or months ahead, and is backward-looking.
Doubters have long criticized Bitcoin for being too erratic to be a reliable store of wealth. Therefore, a sustained decrease in price volatility would be a positive development.
And if that weren’t enough, according to information from graphing tool TradingView, bitcoin’s 20-day realized volatility just exceeded Wall Street’s tech-heavy index Nasdaq for the first time since 2020.
Doubters have long criticized Bitcoin for being too erratic to be a reliable store of wealth. Therefore, a sustained decrease in price volatility would be an improvement.
Although this could indicate that cryptocurrencies are developing as an asset class, such patterns also frequently presage a significant increase in volatility, such as in November 2017, “noted by CryptoCompare.
Arcane Research and cryptocurrency services company Matrixport advised investors to purchase straddles at the beginning of this week in order to profit from a potential volatility eruption.