whalehunter 9 minutes reading from Bitcoin

The Last BTC Price Drop You Can’t Stop?

The last time the BTC volatility was this low, BTC fell 50%.

Will this happen again?

Read this to find out. 👇

Here are the cliff notes from the most recent @glassnode video:

"The Week On-chain: The Spring is Coiled for Volatility - Week 42, 2022"

I highly recommend that you listen to/watch the video.

If you don't have the time, then read my notes.

The Week On-chain: The Spring is Coiled for Volatility - Week 42, 2022 (Bitcoin Onchain Analysis)The Week On-chain: The Spring is Coiled for Volatility - Week 42, 2022 (Bitcoin Onchain Analysis)

1. Price action

Low volatility is uncharacteristic for BTC. BTC has been compressing from September into October between 18.5k and 19.5k

2. There have been two other events where this happened:

November 2018, right before we capitulated by 50%.

April 2019, just before we went from 4,000 to 14,000.

3. Realized volatility = Actual volatility in the BTC space

Before bull runs and before capitulation events, the volatility drops to record lows.

It's like the silence before the storm.

4. Based on on-chain data, we are at a decision point.

Let's have a look at the behaviors on-chain:


ASOPR is the spent profit & loss of transactions on-chain.

Above 1.1 = they're realizing 10% profits Below 0.9 = they're realizing 10% loss.

The horizontal line at 1 is an oscillator and acts as support and resistance.

6. - In the bull market -> it's a support. - In the bear market -> it's a resistance.

Currently, the aSOPR is below 1. The aSOPR needs to go above 1 and stay above 1 for the oscillator to become a support.

That's when a rally will be confirmed.

7. Because investors will be willing to buy the dips during retracements and hold them during rallies.

Currently, most investors are looking at selling rallies and holding dips.

8. As I mentioned, the aSOPR needs to stay above 1. There can be false breakouts where the aSOPR goes above 1 but falls below.

9. Short-Term Holder Spending: This indicator looks at the coins that came in the last 5 months.

For anyone that got in the space in the last 5 months, you are ahead of long-term holders with a better cost basis.

Shor-Term Holder Spending = Cleaner Signal for breakout

10. Long-Term Holder Spending:

This indicator is extremely low; it's trading at 0.55.

This means that long-term holders are locking in 45% losses.

Only 3.3% of days have been at a worse profit multiple.

11. Navigating Tops and Bottoms

You want to have multiple metrics giving you the same signal that the market has bottomed or has turned bullish.

Tools: - Investor Tool - Pi- Cycle Top - Mayer Multiple (very significant!)

12. Next, we will have a look at the derivative space.

How are the future and options market pricing things, and can the high estimated leverage ratio cause the market to crash?

13. Options Implied Volatility

At the moment, BTC options implied volatility is at an all-time low.

The last time it was this low at the April 2021 all-time high.

Then ->50% selloff 🙈

14. Futures Volume

A massive event will follow when the market goes into this low-volatility phase.

Future Volumes declined to December 2020 levels.

Any deleveraging event could amplify a move due to low liquidity—no shock absorber for any move.

15. But wait. It gets even more interesting if we look at Futures Open interest levels.

16. Futures Open Interest hits All-time-high.

BTC futures open interest is 80% higher than the 2021 base level. 🤯

This started increasing as Luna collapsed.

17. Why are there no liquidations even though open interest is at All-time-high?

It starts looking a lot better at what kind of collateral is used.

Crypto or Cash?

18. Cash vs. Crypto Margined Futures

Crypto Margined Futures are not good because whCryptopto is used as collateral, it can lead to a massive crash since the collateral value decreases when Crypto falls.

Cash Margined Futures are better since the collateral is stable.

19. April 21 Cash Margined Futures OI = 113k BTC April 21 Crypto Margined Futures OI = 254k BTC

Oct. 22 Cash Margined Futures OI = 343k BTC

⬅️ Oct. 22 Crypto Margined Futures OI = 169k BTC

20. The current leverage is a lot healthier compared to April 2021.

However, leverage is still dangerous.

21. Futures Market Yield and Directional Bias

April 21 - BTC Futures Annualized Rolling Basis: 40% (degens)🤯 Oct. 22 - BTC Futures Annualized Rolling Basis: 0.6% (smarter)

Less than US treasuries which are yielding 4% 😂

22. Current positions look more like hedging positions. Institutions buy BTC and are also short protecting their position.

This is typical of more sophisticated traders.

Even though there is an incredibly high leverage ratio, it's not as bad as it looks.

23. Liquidations vs. Open Interest

- All-time low Long or short liquidations - Only 0.1% of the open interest is getting liquidated, which is remarkable

24. High volatility event will be coming soon.

This might present a good buying opportunity for those that want to buy the dip. However, I do not recommend using leverage as you will most likely get rekt.

25. I hope you've found this thread helpful.

Follow me @eth_whalehunter for more.

Like/Retweet the first tweet below if you can:

This post is based on this twitter thread.


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