Bitcoin needs volatility and price breakouts to snap investor apathy

• The Bitcoin market has become marked by exhaustion as prices continue to trade sideways.
• Day traders reduced accumulation as many become uncertain of the coin’s next direction.

Bitcoin [BTC] price has been trading within a narrow range of $29,000 to $32,000 since April, facing significant resistance at $30,000. This has led to a state of extreme apathy and exhaustion in the market, with volatility measures and several key on-chain indicators reaching all-time lows, Glassnode found in a new report. 

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BTC, infamous for its significant price volatility, has recently seen its volatility compress. While some analysts believe that this brought much-needed stability to the market following the turbulent trading period in 2022, others have opined that the lack of volatility is a sign that investors are unsure of the market’s direction and have stayed their hands, thereby stagnating the market.

Short-term holders and long-term holders view things differently

Glassnode assessed BTC’s volatility compression by considering the behavior of the coin’s short-term and long-term holders. It analyzed the coin’s Sell-Side Risk Ratio metric and found that it was at an all-time low for its short-term holders.

The Sell-Side Risk Ratio metric tracks the ratio between the sum of all profits and losses being realized in the BTC market and the realized capital.

Being at an all-time low amongst short-term holders means that most investors in this category looking to take profit or loss at this price range have already done so. As a result, “the market must make a move to motivate new spending” as new demand craters. 

Source: Glassnode

Among BTC’s long-term holders, a different approach was adopted. According to Glassnode, “the LTH Profit/Loss Ratio remains small in magnitude, and a far cry from prior bull market conditions.”

This is because long-term holders who were looking to take profit or loss at this price range have yet to do so.

With the sell-side ratio amongst this investor cohort also approaching an all-time low, Glassnode found that the BTC market was close to a point where it would need to experience volatility and price breakouts (in either direction) to “break this current spell of investor apathy and exhaustion.”

Source: Glassnode

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Accumulation dwindles among daily traders

As positive sentiment wanes, buying pressure on the daily chart has also subsided. On a D1 chart, BTC’s key momentum indicators rested below their respective center lines at press time.

The coin’s Relative Strength Index (RSI) was 48.88, while its Money Flow Index (MFI) was 43.48. This indicated that BTC distribution exceeded accumulation amongst the daily traders of the coin.

Source: BTC/USDT on TradingView