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The below is an excerpt from a recent edition of Bitcoin Magazine PRO, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

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

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Waltrip latest to join AF1 Nashville’s ownership

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Waltrip latest to join AF1 Nashville's ownership

NASHVILLE, Tenn. — Two-time Daytona 500 winner Michael Waltrip has joined the ownership group of the Nashville Kats, a founding franchise of the Arena Football 1 league.

The Kats announced Waltrip joining the group Friday along with his craft beer company Michael Waltrip Brewing. The ownership group already includes former NFL coach Jon Gruden with Jeff Fisher, a former coach of the Los Angeles Rams and Tennessee Titans, majority owner.

“We now have three living legends attached to the Nashville Kats — Jeff Fisher, Jon Gruden, and Michael Waltrip — all with the ultimate goal to win championships and raise the AF1 to its ultimate potential along with any team associated with the AF1,” said Bobby DeVoursney, the Kats’ CEO and managing partner.

Waltrip’s brewery now is the team’s official craft beer. The team also plans a “Waltrip Winner’s Circle” fan zone for the upcoming season.

The Kats play the Southwest Kansas Storm on Sunday in Clarksville in the AF1 semifinals.

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Trump’s update on Iran timeline is significant – but it still keeps everyone guessing

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Donald Trump weighing up many risks before possible US strike on Iran

This is the most significant statement from the US president in days, though it still keeps everyone guessing.

In a message conveyed through his press secretary, he is giving diplomacy up to two weeks to work.

“Based on the fact that there’s a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks,” Karoline Leavitt quoted him as saying.

It is not clear what “whether or not to go” entails.

Israel-Iran conflict: Latest updates

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Trump: Iran ‘weeks away’ from nuclear weapon

We know that he has been given a spectrum of different military options by his generals and we know that the Israelis are pressuring him to use American B2 bombers with their bunker-busting bombs to destroy Iran’s nuclear facility at Fodow.

The Israelis are encouraging no delay. But against that, he is weighing up many risks, both military and political.

More on Donald Trump

Militarily, it is not clear how successful a bunker-busting strike on Fordow would be.

Experts have suggested it would require several of the massive bombs, which have never been used in combat before, to be dropped on the site.

It is not as simple as one clean strike and job done.

Politically, the president is under significant pressure domestically not to get involved in Iran.

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MAGA civil war breaks out over Iran

Within his own MAGA coalition – influencers, politicians and media personalities are lining up in criticism of involvement in the conflict.

One of those leading the criticism, his former chief strategist Steve Bannon, who maintains huge influence, was seen entering the White House on Thursday.

His press secretary reiterated to us that the president always wants to give diplomacy a chance and she confirmed that his Middle East envoy Steve Witkoff has spoken to the Iranian foreign minister Abbas Araghchi.

Steve Bannon speaks at a conservative conference in Maryland earlier this month. Pic: AP
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Steve Bannon, seen recently at a conservative event in Maryland, is against US involvement in Iran. Pic: AP

European leaders, including the UK foreign secretary David Lammy, who is in Washington, are meeting Mr Araghchi in Geneva on Friday.

The two-week window – assuming it lasts that long – also gives space to better prepare for any strike and mitigate against some of the other risks of US involvement.

Read more from Sky News:
Is Trump losing his MAGA support?
Gantz defends conflict with Iran
‘Love Trump’ says Israeli minister

There are 40,000 troops in bases across the Middle East. It takes time to increase security at these bases or to move non-essential personnel out. It also takes time to move strategic military assets into the region.

The USS Nimitz aircraft carrier and its support vessels were redeployed from the Indo-Pacific on Monday. Their last known position was the Strait of Malacca two days ago.

The Nimitz Carrier Group will overlap with the USS Carl Vinson group which was deployed to the Middle East in March.

The potential two-week window also allows for more time for a ‘day after’ plan, given that the Israeli strategy appears to be regime change from within.

Since the Israeli action in Iran began last week, the worst-case scenario of mass casualties in Israel from Iranian attacks has not materialised.

The president is said to be surprised and encouraged by this. “Israel has exceeded a lot of people’s expectations in their abilities,” press secretary Karoline Leavitt said.

The Israeli success, the absence of a mass casualty event in Israel, and the lack of any sustained counterattack by Iranian proxies in the region remove reservations that previous presidents have had about taking on Iran.

That said, sources have told Sky News that the president is determined that the diplomatic solution should be given a chance despite current pessimism over the chances of success.

A critical two weeks ahead.

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Trump’s two-week timeline: What next for Iran?

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Trump's two-week timeline: What next for Iran?

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White House press secretary Karoline Leavitt has said Donald Trump will make a decision on whether to militarily strike Iran in the next two weeks. That’s as diplomatic talks between Western governments and the Iranians ramp up.

In today’s episode, US correspondents Mark Stone and Martha Kelner unpick why the delay might be, and the competing voices in the ears of the president.

If you’ve got a question you’d like the Trump100 team to answer, you can email it to trump100@sky.uk.

Don’t forget, you can also watch all episodes on our YouTube channel.

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