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Will Crypto Volatility Crunch Precede an Explosive Move for BTC and ETH?

2 mins
Updated by Kyle Baird

In Brief

  • Crypto markets have been mostly flat for more than two months.
  • Previous instances of low volatility led to big moves.
  • Total market cap remains flat on the day at $885 billion.
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Crypto markets have been relatively dormant for the past nine weeks. Such periods of low volatility usually precede a large move according to on-chain analysis.

In a Jan. 9 report, on-chain analytics provider Glassnode said that markets started the year asleep. They have actually remained tightly range bound since the FTX collapse in early November.

Bitcoin and Ethereum have recently seen historically low volatility, which could be a prelude to something bigger.

“Such periods have historically preceded explosive market moves, with past examples both cutting asset valuations in half, and triggering new bull markets.”

Historical Crypto Volatility Lows

Bitcoin traded within a price range of just $557 for over three weeks. It finally broke out to top $17,000 on Jan. 9 but still appears to be in a consolidation phase.

The last two times there was such extremely low realized volatility were in November 2018 and April 2019. The first period was followed by a massive market slump and the second by a big pump.

Aside from November 2018, all prior examples “preceded much higher volatility environments on the road ahead, with most trading higher,” it added.

Bitcoin realized volatility - Glassnode
Bitcoin realized volatility – Glassnode

On-chain activity, such as new and active BTC addresses, has also been flat-lined for several months. Additionally, the total USD value processed by the Bitcoin network has been in freefall, according to Glassnode.

Large transactions have declined, which “suggests a significant lull in institutional sized capital flows, and perhaps a serious shaking of confidence occurring amongst this cohort.”

Furthermore, there have been even fewer historically quiet periods for ETH. A July 2020 quiet period was followed by the beginning of the 2020/21 bull market.

Ethereum gas prices have been near cycle lows, indicating diminished demand for block space. This has been across a number of sectors, the report added.

“Several domains are declining in their relative gas consumption dominance: MEV bots, Bridges, DeFi protocols, and ERC-20 tokens.”

Furthermore, 2022 was the first year BTC and ETH closed below previous cycle highs.

Glassnode concluded that the 2022-23 holiday period has been historically quiet, “and it is rare for such conditions to stick around for long.”

Crypto Market Outlook

Monday’s explosive start to the week has already run out of steam. As a result, markets have not moved much over the past 24 hours, with total capitalization remaining at $885 billion.

Furthermore, the drawdown from peak capitalization levels remains at 71.3%, according to CoinGecko.

If history repeats, there could be a relief rally in the next month or two, but the bears are likely to linger until the latter half of 2023.


In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.