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As we head into 2023, we want to highlight the latest state of bitcoin’s volume and volatility after a recent wave of capitulation. Last time we touched on these dynamics was in “The Bitcoin Ghost Town” in October, where we highlighted that an extremely low volume and low volatility period in bitcoin price, GBTC and the options market was a concerning sign for the next leg lower. This played out in early November.
Fast forward and the trends of declining volume and low volatility are back once again. Although this could be indicative of another leg lower to come in the market, it’s more likely indicative of a complacent and decimated market that few participants want to touch.
Even during the November 2021 capitulation period, there was a historically low period of volatility. Sometimes the most market pain can be felt when having to wait for a clear change in trends. The bitcoin price is providing that pain as we’ve yet to see the type of explosion in market volatility that has defined market pivots and major directional moves in the past.
SPX Bottoms
While there are many different ways to define, classify and estimate bitcoin volume in the market, they all show the same thing: September and November 2021 were the peak months of action. Since then, volume in both the spot and perpetual futures markets have been in steady decline.
Bitcoin volume across spot and perpetual futures markets
Overall market depth and liquidity has also taken a major hit after the collapse of FTX and Alameda. Their destruction has led to a large liquidity hole, which is yet to be filled due to the lack of market makers currently in the space.
By far, bitcoin is still the most liquid market of any other cryptocurrency or “token,” but it’s still relatively illiquid compared to other capital markets since the whole industry has been crushed over the last few months. Lower market depth and liquidity means assets are prone to more volatile shocks as single, relatively large orders can have a greater impact on market price.
Source: Kaiko Q4 Report
Source: Kaiko Q4 ReportOn-Chain Apathy
As expected in the current environment, we’re also seeing more market complacency when looking at on-chain data. Although continuing to rise over time, the number of active addresses — unique addresses active as either a sender or receiver — remain fairly stagnant over the last few months. The chart below highlights the 14-day moving average of active addresses falling below the running average over the last year. In previous bull market conditions, we’ve seen growth in active addresses outpace the existing trend fairly significantly.
Moving averages of active bitcoin adresseses
Since address data has its flaws, looking at Glassnode’s data for active entities shows us the same trend. Overall, bear markets reversing are the result of many factors, including growth in new users and an increase in on-chain activity.
Moving averages of active bitcoin entities
Bitcoin transfer volume momentum
Bitcoin seller exhaustion levels
In our July 11 release “When Will The Bear Market End?”, we made the case that the brunt of the price-based capitulation had already been felt, while the real pain ahead was in the form of a time-based capitulation.“A look at previous bitcoin bear market cycles shows two distinct phases of capitulation:
“The first is a price-based capitulation, through a series of sharp selloffs and liquidations, as the asset draws down anywhere from 70 to 90% below previous all-time-high levels.
“The second phase, and the one that is spoken of far less often, is the time-based capitulation, where the market finally begins to find an equilibrium of supply and demand in a deep trough.” — Bitcoin Magazine PRO
We believe time-based capitulation is where we stand today. While exchange rate pressures can certainly intensify over the short term — given the macroeconomic headwinds that remain — the conditions that look likely to persist over the short and medium term look to be a sustained period of chop with extremely low levels of volatility that leave both traders and HODLers questioning when volatility and exchange rate appreciation will return.
Like this content? Subscribe now to receive PRO articles directly in your inbox.Relevant Past Articles:The Bitcoin Ghost TownWhen Will The Bear Market End?On-Chain Data Shows ‘Potential Bottom’ For Bitcoin But Macro Headwinds RemainState Of The Mining Industry: Survival Of The Fittest
Donald Trump says he would end Russia’s war in Ukraine should he return to the White House – but any rushed deal will likely leave Kyiv much weaker and European security in even greater peril.
Another major flashpoint a Trump presidency would immediately seek to influence is the escalating conflict between Iran and Israel.
Mr Trump came close to direct war with Tehran during his first term in office and prior restraint could well give way to direct confrontation this time around.
Then there is the overwhelming longer-term challenge posed by China, with North Korea another growing headache especially after Mr Trump tried but failed to woo the leader of the hermit state during his first stint as commander-in-chief.
With the US election on a knife edge, hostile and friendly capitals around the world have been gaming what a second Trump White House might mean for their respective national interests and for the most pressing global security threats.
Mr Trump’s track record of unpredictability is a challenge for traditional foes – but also for Washington’s closest allies, in particular fellow members of the NATO alliance.
The Republican nominee has made no secret of his frustration at how the US has for decades bankrolled the security blanket that protects Europe.
During his first term as president, Mr Trump threatened to withdraw the US from the alliance – a move that would almost certainly sound its death knell. His rhetoric did help to spur allies to dig deeper into their pockets and spend more on their militaries, though.
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But the damage of years of underinvestment is deep and the pace of recovery is too slow for European NATO allies and Canada to credibly stand on their own as a potent military force any time soon.
In terms of immediacy when it comes to global crises, the impact of a Trump victory on 5 November would be felt most acutely by Ukraine and also by Iran.
The presidential candidate has repeatedly claimed that he would quickly end the Ukraine war, though without explaining how or what peace would look like.
In an indication of where his priorities lie, however, he has accused Ukrainian President Volodymyr Zelenskyy of being the “greatest salesman on earth” for securing tens of billions of dollars in weapons and other assistance that Washington has given to Kyiv.
Yet – coupled with Ukraine’s willingness to fight – that military aid is the biggest reason why Ukraine has managed to withstand almost 1,000 days of Vladimir Putin’swar.
Stop the flow of American weapons, and Ukrainian troops – despite their own ingenuity and the support of other allies – will simply lack the firepower to keep resisting the onslaught.
By contrast, US vice president Kamala Harris, who is vying for the top job, has made clear that she views continued support to Ukraine as being as vital to US and Western interests as it is to Kyiv’s – a far more familiar stance that echoes the view of her NATO partners.
While US support for Ukraine would undoubtedly change under a Trump administration, that is not the same as facilitating a complete surrender.
The former president – who portrays himself as the ultimate dealmaker and has adopted a new election slogan – “Trump will fix it” – will not want to be held responsible for the total absorption of Ukraine into Mr Putin’s orbit.
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2:22
How does the US election work?
Putin and Iran
His relationship with the Russian president is a particularly interesting dynamic.
But with the right advice, might a future President Trump be able to use his connection with Mr Putin to the West’s advantage?
At the very least, it adds a new level of unpredictability – which is perhaps the most important element when it comes to assessing the potential impact on the world of a second Trump term.
On Iran, in stark contrast to his approach to Russia’s war in Ukraine, a future President Trump may well back much greater US military support for Israel’s conflict against Tehran and its proxies – perhaps even direct involvement by US forces in strikes on Iran.
Mr Trump has an even tougher stance towards Tehran and its nuclear ambitions than Joe Biden’s administration.
His decision to rip up a major nuclear deal with Iran was one of his most significant foreign policy acts during his four years as president.
It is also personal, with Iran accused of hacking the Trump campaign in recent months – an attack that would surely only heighten tensions with Iran during any second Trump term.
On election night, Sky News will have access to the most comprehensive exit poll and vote-counting results from every state, county and demographic across America through its US-partner network NBC.
You can find out more about Sky News’ coverage here.
Donald Trump says he would end Russia’s war in Ukraine should he return to the White House – but any rushed deal will likely leave Kyiv much weaker and European security in even greater peril.
Another major flashpoint a Trump presidency would immediately seek to influence is the escalating conflict between Iran and Israel.
Mr Trump came close to direct war with Tehran during his first term in office and prior restraint could well give way to direct confrontation this time around.
Then there is the overwhelming longer-term challenge posed by China, with North Korea another growing headache especially after Mr Trump tried but failed to woo the leader of the hermit state during his first stint as commander-in-chief.
With the US election on a knife edge, hostile and friendly capitals around the world have been gaming what a second Trump White House might mean for their respective national interests and for the most pressing global security threats.
Mr Trump’s track record of unpredictability is a challenge for traditional foes – but also for Washington’s closest allies, in particular fellow members of the NATO alliance.
The Republican nominee has made no secret of his frustration at how the US has for decades bankrolled the security blanket that protects Europe.
During his first term as president, Mr Trump threatened to withdraw the US from the alliance – a move that would almost certainly sound its death knell. His rhetoric did help to spur allies to dig deeper into their pockets and spend more on their militaries, though.
Advertisement
But the damage of years of underinvestment is deep and the pace of recovery is too slow for European NATO allies and Canada to credibly stand on their own as a potent military force any time soon.
In terms of immediacy when it comes to global crises, the impact of a Trump victory on 5 November would be felt most acutely by Ukraine and also by Iran.
The presidential candidate has repeatedly claimed that he would quickly end the Ukraine war, though without explaining how or what peace would look like.
In an indication of where his priorities lie, however, he has accused Ukrainian President Volodymyr Zelenskyy of being the “greatest salesman on earth” for securing tens of billions of dollars in weapons and other assistance that Washington has given to Kyiv.
Yet – coupled with Ukraine’s willingness to fight – that military aid is the biggest reason why Ukraine has managed to withstand almost 1,000 days of Vladimir Putin’swar.
Stop the flow of American weapons, and Ukrainian troops – despite their own ingenuity and the support of other allies – will simply lack the firepower to keep resisting the onslaught.
By contrast, US vice president Kamala Harris, who is vying for the top job, has made clear that she views continued support to Ukraine as being as vital to US and Western interests as it is to Kyiv’s – a far more familiar stance that echoes the view of her NATO partners.
While US support for Ukraine would undoubtedly change under a Trump administration, that is not the same as facilitating a complete surrender.
The former president – who portrays himself as the ultimate dealmaker and has adopted a new election slogan – “Trump will fix it” – will not want to be held responsible for the total absorption of Ukraine into Mr Putin’s orbit.
Please use Chrome browser for a more accessible video player
2:22
How does the US election work?
Putin and Iran
His relationship with the Russian president is a particularly interesting dynamic.
But with the right advice, might a future President Trump be able to use his connection with Mr Putin to the West’s advantage?
At the very least, it adds a new level of unpredictability – which is perhaps the most important element when it comes to assessing the potential impact on the world of a second Trump term.
On Iran, in stark contrast to his approach to Russia’s war in Ukraine, a future President Trump may well back much greater US military support for Israel’s conflict against Tehran and its proxies – perhaps even direct involvement by US forces in strikes on Iran.
Mr Trump has an even tougher stance towards Tehran and its nuclear ambitions than Joe Biden’s administration.
His decision to rip up a major nuclear deal with Iran was one of his most significant foreign policy acts during his four years as president.
It is also personal, with Iran accused of hacking the Trump campaign in recent months – an attack that would surely only heighten tensions with Iran during any second Trump term.
On election night, Sky News will have access to the most comprehensive exit poll and vote-counting results from every state, county and demographic across America through its US-partner network NBC.
You can find out more about Sky News’ coverage here.
The sprawling state of Arizona was once reliably Republican but in 2020 that changed.
Joe Biden became only the second Democrat to win here since 1948, winning by less than 11,000 votes, and polling suggests Arizona could once again be won and lost by the narrowest of margins.
Above Phoenix, Dobbins Lookout provides a panoramic view of the rugged Grand Canyon State.
Many of the people there to watch the Friday night sunset were contemplating a consequential decision.
Those include Jennifer Montero and her fiance Richie Garcia, who say their vote on Tuesday is based on their economic circumstances.
“Prices have gone up like crazy,” said Ms Montero, “and then, especially now that I’m wanting to get married and have kids, I definitely want to be able to go to McDonald’s and afford a spicy for a dollar like they used to be.”
The couple are of Mexican descent, in a state where one in four voters are Latin American and the debate about immigration is complicated.
More on Arizona
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For Mr Garcia, being born in America means the border is less of a concern.
“Times are changing. I think a lot of the Hispanic community was very inclined to vote Democrat due to immigration status, but my parents are citizens. I believe that immigration status doesn’t really matter to me much anymore,” he said.
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Less than 30 minutes away in downtown Phoenix, people were already beginning to vote at a drive-through polling centre.
One of them was Renee Rojas, a lifelong Republican voting Democrat for the first time.
Ms Rojas, who is of Native American and Latino descent, says that decision is down to Donald Trump.
“Recent rhetoric and the changes of the Republican Party just made me realise that things are not going the way they should be,” she said, before adding, “My mom, my grandmother is a Republican. She’s Navajo. You know, my other family members and friends, they’re all Republicans, but half of them are voting Democrat this year.”
Ms Rojas’s thoughts on the prospect of trouble after the result are a reminder of the strong Conservative values of the state she lives in.
“I’m an Arizonan. I have a gun myself, I have several different kinds of firearms, heavy machine guns and handguns. So I am a proud gun holder and people will demonstrate the way they want to as long as they’re not hurting anybody.”
For other drive-through voters like Peter Orozco, the choice was a simple one, about stability.
He feels the current administration will maintain the foreign policy status quo.
“We can’t politically make any big changes, especially on an international scale, you know, because if we get somebody else president other than what the existing presidency is, it could be World War Three,” he said.
In Arizona, there are other voters who feel the state is worse off since the Democrats came to power.
They include Dane Jensen, a 26-year-old mortgage broker.
For the last few days, Mr Jensen has been standing outside another polling station in Scottsdale with a “Swifties for Trump” banner.
He made the banner as a joke to try to ruffle the feathers of people voting for the Democratic party, which the singer has endorsed.
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About Swift, he said: “That’s like someone like that who has a private jet and is flying around the country who is, in my opinion, creating more fossil fuels and bad energy for the environment than any one person.
“And for you to sit there on your high horse and billions of dollars, and tell people what you think should happen when you’re already set for life, I don’t really agree with that.”
“I’m born and raised here. So I know that area as well as anyone. But, you know, crime, the border economy, those are really important issues, they’re everyday issues,” he said.
It’s those everyday issues in a handful of vital places like Arizona that will decide an election hinging on the tightest of margins.
On the night, Sky News will have access to the most comprehensive exit poll and vote-counting results from every state, county and demographic across America through its US-partner network NBC.
You can find out more about Sky News’ coverage here.