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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
Close to its many restaurants, food delivery riders are congregating on their bikes.
The area is packed with shoppers and workers.
PC Paige Gartlan is approaching with other officers. She’s on the lookout for illegally modified e-bikes – and she knows she’ll find them here.
“You can physically tell by looking at the bike that it’s generally going to be illegal – the battery pack is taped on to the sides and generally the size of the motor that’s on the back wheel,” she explains.
Sky News has been invited on an operation by West Midlands Police to find these bikes and get them off the streets.
PC Gartlan has been hit by one before. She’s had to tackle a rider to the floor after he drove into her.
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Within minutes, she’s spotted a suspicious-looking bike. The rider makes a run for it – followed by plain-clothed officers.
PC Gartlan tests the bike – it’s showing a top speed of 52km/hr on the speedometer – just over 30mph.
Image: PC Paige Gartlan with a seized e-bike
The speed limit for e-bikes in the UK is 15.5mph when using electric power for assistance.
I look up the street and another two riders have been detained. In less than an hour, officers have confiscated four bikes – all were being ridden by fast food delivery drivers.
The commotion is attracting a lot of attention.
“They are dangerous,” Sandra, who has just finished work, tells me.
Image: Demoz had his bike taken by police
She’s stood watching the riders being questioned. She says she’s had near-misses herself and is worried for the safety of the elderly and children.
It’s not just West Midlands police officers here – immigration officials are carrying out checks too. They’re involved in a nationwide operation, which has seen more than 7,000 arrests in the last year – a 50% increase on last year.
Matthew Foster, the immigration enforcement lead officer for the West Midlands, tells me they’ve already found one individual who has entered the UK unlawfully.
“He’s been detained,” he says, “to affect his removal from the UK.”
Further down the street, police are loading illegally modified bikes on to a van – they’re destined to be crushed. One of them had belonged to Demoz.
He’s on his way home, carrying a big box with the logo of one of the main fast food delivery firms on it.
He tells me he used to have an illegal bike, but he thought his new one was legal.
“I make a mistake, I have to say sorry, I will do better for the future,” he says.
I get in touch with the big delivery firms; Deliveroo, Uber Eats, and Just Eat.
Their representatives say they constantly remind workers of their safety obligations, and that they’re all working closely with the government to increase security checks on riders.
As he leaves, Demoz, now bike-free, tells me he’s thinking of changing his job.
Watching pictures of Prince Harry in Angola this week took me back to 2019, when we were there for his first visit following in Princess Diana’s footsteps.
The pictures on Wednesday looked so similar; his effortless interactions with people who face the daily dangers of landmines, and his obvious passion to help a charity that he cares deeply about.
Of course so much has happened in the six years since then, but with other headlines this week, I couldn’t help but feel like we could be looking at the beginning of a reset for Harry.
It started last Saturday night, as the story emerged of a meeting between the King’s communications secretary, Harry’s new London-based head of PR, and Harry’s most senior aide in America.
The pictures of the get-together were being sold for thousands of pounds by the paper that ran them, just one indication of the global fascination about whether father and son may be on the road to reconciliation.
Neither side are willing to go there when you ask what exactly they talked about, although I suspect some of it was much more practical than about trying to mend this fractured relationship.
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Things like trying to avoid unnecessary negative stories, for example, the kind where Harry is accused of snubbing his father because they just happen to be doing jobs on the same day.
Image: Prince Harry meets landmine victim Sandra Tigica in Angola in 2019, who Princess Diana met on her visit to Angola in 1997
It’s tricky for Harry’s camp to avoid such a situation when they don’t have sight of the King’s diary.
There’s also been the chatter about who may, or may not, have leaked the meeting.
There has been speculation around why they were out on a balcony, and who spotted the photographer in the park.
But whether it was a leak, or just a really good spot from a journalist or photographer, it’s not a bad thing for either side that we’re now all talking about whether father and son may be close to patching things up.
It did however raise other questions, about what it means for Prince William and his relationship with his brother.
So far there have been no indications of any meeting between William’s team and that of his brother.
The feelings of William also, you may think, a consideration for the King.
Image: The King and Prince Harry in 2018. Pic: PA
The unexpected headlines around Harry just kept coming, as on Tuesday he popped up in Angola.
His second visit there, this time with no press pack in tow.
So why the surprise visit?
Harry has worked with the Halo Trust for some time, and it’s clearly still a priority for them to highlight the dangers faced by those living with the potential dangers of landmines in Angola.
But it also feels like part of a push to get Harry out on more public engagements.
I’ve been told that since moving away from the UK he has continued to have regular contact with those charities with which he’s maintained ties, but being on the phone or a video call, isn’t the same as physically being there in person.
We saw something similar with his trip to China with Travalyst earlier this year, some may argue not the best choice of destination, but another example of wanting to get him physically out on visits to reinforce publicly those connections with causes that matter so much to him.
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Prince Harry follows in Diana’s footsteps
For some months now it’s felt like Meghan has regained an element of control over how she wants to be seen.
Just look at her social media accounts and the success of her “As Ever” brand.
Whether Harry for the first time would step on to the social media scene with his own public account we wait to see, although the idea of his own commercial project is more likely, with suggestions something may be in the pipeline, we wait and see what.
After a constant flow of stories in recent months relating to court cases or his ongoing row with his family, this week has felt different.
A lot has been made about Harry and Meghan establishing a new “court” and what lies behind their decision to hire new people, five years after they stepped away from royal life.
There are of course elements of the recent past that it is impossible to erase, even Harry, in his recent interview talked of how he would “love reconciliation with my family” but added, “Of course, some members of my family will never forgive me for writing a book. Of course, they will never forgive me for… lots of things.”
But it does feel like their new team are tentatively attempting to push the reset button; getting Harry out on more engagements just one way they hope to focus our minds back on to what he has always done best.
On Friday, Paola Paiva waited in a hotel near Caracas airport, nervous but giddy with excitement to be reunited with her brother, finally.
For five months, Arturo Suarez has been detained in a notorious prison in El Salvador.
“I am going to wait for my brother to call me,” she told Sky News, “and after giving him a hug, I want to just listen to him, listen to his voice. Let him talk and tell us his story.”
Suarez was one of the more than 250 Venezuelan migrants who had been living in America but were arrested in immigration raids by the Trump administration and sent to El Salvador, a showpiece act in the president’s promise to deport millions of migrants.
Image: Paola Paiva holds a vigil for brother Arturo Suarez. Pic: Reuters
Most of the men had never even been to El Salvador before. Their detention has been controversial because the White House claims the men are all part of the dangerous Tren de Aragua gang but has provided little evidence to support this assertion.
The only evidence Paola had that Suarez was still alive was a picture of him published on a news website showing the inside of the maximum security CECOT jail.
He is one of dozens of men with their hands and feet cuffed, heads shaved and bodies shackled together.
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Now he is returning to his home country, one of the bargaining chips in a deal that saw the release of ten Americans and US permanent residents who had been seized by the Venezuelan authorities.
Image: Venezuelans arrive back in home country after being detained in El Salvador
Paola had tried to go to the airport to greet her brother as he disembarked a charter plane bringing the men back from El Salvador but authorities told her to wait at a nearby hotel.
“They told us they are taking them all to a hotel to rest,” she said.
“But I managed to get someone to give my phone number on a piece of paper to my brother, so I am expecting his call tomorrow, as soon as he can access a phone.
“We heard they are going to perform some medical exams on them and check their criminal records,” she added. “I’m not afraid; I’m not worried since my brother has a clean record.
“I am so happy. I knew this day would happen, and that it would be unexpected, that no one was going to notify us. I knew it was going to be a total surprise.”
Image: US citizens released from Venezuela. Pic: Reuters
The Trump administration had paid the El Salvador government, led by President Nayib Bukele, millions of dollars to imprison the men.
Homeland security secretary Kristi Noem visited CECOT last month, posing in front of prisoners for a photo opportunity.
But Cristosal, an international human rights group based in El Salvador, says it has “documented systematic physical beatings, torture, intentional denial of access to food, water, clothing, health care,” inside the prison.
A video which was seemingly filmed aboard the charter flight bringing the Venezuelan migrants back to Caracas shows Arturo briefly talking about his experience inside.
He looks physically well but speaks into the camera and says: “We were four months with no communication, no phone calls, kidnapped, we didn’t know what (the) day was, not even the time.
“We were beat up at breakfast, lunch and dinner,” he continues.
Sky News interviewed Arturo Suarez‘s brother Nelson near his home in the US in April, weeks after Arturo – an aspiring singer – had been arrested by immigration and customs enforcement (ICE) agents while filming a music video inside a house.
Nelson said he believed Arturo’s only crime was “being Venezuelan and having tattoos.” He showed me documents that indicate Arturo has no criminal record in Venezuela, Chile, Colombia or the United States, the four countries he has lived in.
Now Nelson is delighted Arturo is being released – but worries for his future.
“The only thing that casts a shadow in such a moment of joy is that bit of anger when I think that all the governments involved are going to use my brother’s story, and the others on that flight, as political gain,” he said.
“Each of them will tell a different story, making themselves the heroes, when the reality is that many innocent people suffered unfairly and unnecessarily, and many families will remain separated after this incident due to politics, immigration and fear.”