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- The current cycle has seen a significant drop in volatility and trading volume.
- Despite this, long-term holders of Bitcoin continued to increase their accumulation.
With the current market cycle characterized by compressed volatility and low trading volume, the total value of on-chain and off-chain transactions in the digital asset market has fallen to the lowest level since 2020, says on-chain analytics firm Glass junction found in a new report.
The on-chain data provider assessed the performance of leading stablecoins, Bitcoin [BTC]and Ethereum [ETH], since the beginning of the year. The report noted that after a period of significant net capital inflows at the start of the year, recent months have seen “a return to neutral or negative inflows, indicating that a degree of stagnation and uncertainty prevails has got.”
According to Glassnode:
“All in all, it can be said that extreme apathy and boredom best describe the prevailing sentiment.”
Despite all this, USDT remains king
The supply of stablecoins has steadily decreased since April 2022. Fears of a contagion effect following the unexpected collapse of LUNA-UST in May of the same year led many stablecoin holders to redeem their assets.
This increased coin redemption has resulted in a 26% drop in the total supply of stablecoins, Glassnode found. Since April 2022, this has fallen from $163 billion to $120 billion, with a flush-out of $43 billion.
Source: Glassnode
However, the three leading stablecoins are Tether [USDT]USD coin [USDC]and BinanceUSD [BUSD]are affected in different ways.
Since the current cycle low in November 2022, when the collapse of the cryptocurrency exchange FTX began, USDT’s supply has increased by another $13.3 billion. USDC, on the other hand, has suffered a supply drop of $16.7 billion.
USDC briefly lost its dollar peg in March 2023 after Circle, the company that issues it, revealed that it could not withdraw $3.3 billion of the $40 billion USDC reserves held at Silicon Valley Bank (SVB). This caused panic selling and the stablecoin briefly traded as low as 96 cents.
As for BUSD, supply is down 89% since November 2022. According to Glassnode, this is “largely due to issuer Paxos moving to a redemption-only mode following SEC enforcement.”
Source: Glassnode
Volatility in the BTC market remains low
After periods of slight increases in volatility following the August 17 deleveraging and Grayscale’s court victory over the Securities and Exchange Commission (SEC), BTC’s realized volatility has plummeted.
Glass button found,
“The market is still in a historically low volatility environment, which is usually a harbinger of increased volatility in the longer term.”
The decline in the total USD volume of coins changing hands on the Bitcoin network accurately reflects the low liquidity and volatility in the market. According to Glassnode, “this is languishing around the cycle low of $2.44 billion per day and has returned to October 2020 levels.”
Interestingly, long-term holders remain resilient despite the on- and off-chain liquidity drought.
“The Long-Term Holder cohort’s supply has reached a new ATH of 14.74 million BTC. Conversely, supply within the short-term cohort, which represents the more active part of the market, has fallen to the lowest supply since 2011.”