Volatility Ahead As Bitcoin (BTC) Set To Go Out Of Balance: Glassnode

In its weekly on-chain report, analytics provider Glassnode cautioned that a big move forward is likely for BTC after a period of low volume and volatility.

“Given the extremely low volatility, and narrow trading ranges of late, it looks like this balance will soon be upset,” it noted.

Bitcoin jumped 4% on news that the US government would reach a settlement on the debt ceiling. However, this move was not enough to break out of the tight, range-bound channel it has been trading in over the past few weeks.

With prices falling, and volatility spring coiled, #bitcoin The market looks increasingly poised to move out of the current equilibrium. As long-term holder fees are a bit high, we present a range of on-chain tools to help you navigate the volatile road ahead.… pic.twitter.com/GsHqUZFfiO

— Glassnode (@glassnode) May 29, 2023

Bitcoin volatility at historic low

Furthermore, BTC has started to pull back from that minor spurt of activity. Glassnode confirmed that both the digital asset and the commodity are currently experiencing their second uptrend correction of the year. It also saw a tighter correlation between the two asset classes in 2023.

The report showed that monthly realized volatility dropped to 34%, “which is 1-standard deviation below the Bollinger Bands,” which noted,

Such low volatility has been observed in less than 20% of historical market activity, “so the expectation of higher volatility over the near-term horizon is a logical conclusion.”

In addition, the volume of transfers remains low, which is related to low exchange flows. It was observed that the recent exchange activity has fallen by -27.3% over the last six months.

“Low volatility, and a drop in on-chain activity all point to an equilibrium phase of sorts.”

The Net Unrealized Profit/Loss (NUPL) metric confirms this with a reading of 0.29 which is the lower limit of the balancing phase. A break below 0.25 would indicate that market profitability is back in the capitulation and recovery phase.

Glassnode concluded, “It looks like the market currently has little gravity pulling in either direction.”

BTC Price Outlook

BTC price has retraced 0.7% on the day, as the asset climbed above its Monday high of $28,000. As a result, BTC has fallen back to trade at $27,775 at the time of writing.

Support is currently located at $27,200, with more support at $26,600. There could be more pain in the short term if the expected volatility results in another downside move, continuing the trend that began in mid-April.