Analytics provider Glassnode has issued a cautionary report in its weekly on-chain analysis, suggesting that Bitcoin (BTC) is poised for a significant movement after a period of low volume and volatility. Glassnode noted that the recent extended period of minimal volatility and narrow trading ranges is likely to be disrupted shortly.
The news of the U.S. government reaching an agreement on the debt ceiling prompted a 4% surge in Bitcoin’s price. However, this increase was insufficient to break BTC out of its current tight, range-bound channel that has persisted over the past few weeks. BTC has already started retracing from its minor burst of activity.
Glassnode‘s report also highlighted that digital assets and commodities are undergoing their second corrective upswing of the year, and it observed a closer correlation between these two asset classes in 2023.
The report disclosed that Monthly Realized Volatility has dropped to 34%, falling below the 1-standard deviation Bollinger Band. This level of low volatility has been seen in less than 20% of historical market activity, leading to the logical expectation of increased volatility in the near term.
Additionally, transfer volumes remain low, indicating reduced exchange flows. Recent exchange activity has decreased by 27.3% compared to the past six months, further supporting the notion of a phase of equilibrium.
The Net Unrealized Profit/Loss (NUPL) metric, which currently sits at 0.29, reinforces this equilibrium phase. A drop below 0.25 would signify a decline in market profitability, potentially entering the capitulation and recovery phase.
Glassnode concluded that the market currently lacks a clear directional pull, suggesting a state of indecisiveness.
As of now, BTC has retreated by 0.7% and is cooling off from its Monday high of just over $28,000. Presently, the cryptocurrency is trading at $27,775.
Immediate support is anticipated at $27,200, with further support at $26,600. If the expected volatility materializes and leads to another downward movement, the ongoing trend that started in mid-April could result in more short-term losses.
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