Bitcoin Volatility Hits Historic Lows Amid 71% of Supply in Profit
Bitcoin's one-month realized volatility has fallen to near historic lows, with Glassnode attributing the decline to long-term holders keeping their coins off the market rather than changes in market cap, open interest, or funding rates. This development has sparked interest in the cryptocurrency market, with many analysts weighing in on the significance of this trend.
Low Volatility and Its Implications
One-month realized volatility measures how much daily returns have varied over the past thirty days, using actual price changes rather than options-implied estimates. When it compresses, day-to-day moves get smaller. In the case of Bitcoin, the current low volatility suggests that the market is in a calmer phase. However, this calm period can also be a source of selling pressure if prices move back toward previous highs.
Long-Term Holder Supply: The Key Factor
Glassnode found that long-term holder supply was the strongest factor explaining changes in Bitcoin's one-month realized volatility, ranking above market cap, open interest, and funding rates. This is significant because long-term holders are holding coins that have not moved on-chain for more than 155 days, keeping a large part of Bitcoin's supply out of the market even as prices rise and fall. With fewer coins changing hands, buying and selling have less supply to push against, which can help keep daily price swings contained.
71% of Circulating Supply in Profit
About 71% of Bitcoin's circulating supply is currently in profit, meaning those coins last moved on-chain at prices below today's level. This figure is approaching the historical average of 74.7%, a level that has often appeared around periods when Bitcoin shifted from a bear market into a new bull phase. However, it's essential to note that this reading alone does not signal a new uptrend.
Upward Consolidation: A Market Setup
Bitfinex analysts describe Bitcoin's current setup as an upward consolidation, meaning the price is moving sideways after a directional move as the market absorbs the earlier gains. Bitcoin briefly pushed above $82,000 on September 3, but the move failed to hold, with the price reaching $82,283 before closing at $79,092 on September 7, and around $78,000 today. Bitfinex points to ETF inflows and stablecoin growth as signs supporting the market, while highlighting continued positive ETF flows as something to watch.
What to Watch Next
Three scheduled events could give Bitcoin's quiet market something to react to over the next eight days. August CPI is due on September 11, the Senate is set to vote on cloture for the CLARITY Act on September 15, and the Federal Reserve will announce its next rate decision on September 16, with Polymarket pricing a hike at 60% to 65% and CME FedWatch at 58.4%. Low volatility suggests Bitcoin's recent price swings have been contained, but that can change quickly with a fresh catalyst. With three potentially market-moving events packed into eight days, the next major move could come from either a stronger push higher or another wave of selling. Spot ETF net flows need to stay positive week over week to support the institutional demand Bitfinex highlights, while Bitcoin needs to reclaim and hold above the $82,283 high from September 3 on a daily close to provide the confirmation the firm says is still missing. A decline in long-term holder supply would suggest that coins previously kept off the market are starting to move again, potentially weakening the force that has kept Bitcoin's volatility compressed.
