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20th October 2022 > > Glassnode Analytics.


Glassnode Analytics agrees that low volatility cannot last for long.

Market Snap

Market Wrap

Yields climbing ever higher keeping risk assets in a precarious situation.

Occasional Series – The Daily Star

Not my usual go-to publication, but you have to laugh at its livestream of a decaying lettuce, asking if it will last longer than Liz Truss:

Curious Cryptos’ Commentary – Glassnode Analytics and volatility

I mentioned yesterday that volatility was at two-year lows, and unlikely to stay that way for long.

What I should have done is head on over to Glassnode Analytics to check out their latest report:

The title of this report gives the game away – “A Coiled Spring”.

With much greater data analysis than I, and expressed much more elegantly, Glassnode have come up with the same conclusion as I.

Their starting point is effectively the same as mine, though that’s where my analysis came to a screeching halt:

Next, the analysis looked at realised volatility – as opposed to implied volatility derived from options prices, which are actually at an all-time low:

According to Glassnode:

“It is very uncommon for BTC markets to reach periods of such low realized volatility, with almost all prior instances preceding a highly volatile move. Historical examples with 1-week rolling volatility below the current value of 28% in a bear market have preceded significant price moves in both directions .”

That is more or less what I said yesterday. Sort of.

The next metric to be considered is aSOPR which measures the average realised profit/loss for coins on any specific day.

A figure above 1.0 shows that profits are being taken, whilst below 1.0 losses are being realised:

Psychologically this key. When sentiment is positive, one might expect holders to be keen to add at their previous acquisition cost. When sentiment is negative, one might expect holders to be keen to get out at their acquisition cost.

And it is this latter factor which I believe has been the major driving force of the last few months and will continue to weigh on markets until the broader investment world looks more positive. I know myself through hundreds of crypto conversations, that many crypto owners who bought during the bull run would snatch at the chance to get out flat.

Personally, I believe that would be a mistake (NOT investment advice) though it is a perfectly understandable sentiment.

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