Why This Bitcoin Bull Market is Like a Sturdy Old Chair: It Just Won’t Break!

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What to know:

  • Bitcoin‘s latest bull market, which began in the early days of 2023, is as stable as a tortoise on a sunny day, with realized volatility averaging less than 50%. Who knew crypto could be so calm? 🐢
  • Exchanges have decided to play nice and reduced leverage limits, leading to a more stable rally with fewer dramatic swoons than a soap opera. 🎭

Ah, Bitcoin! The digital currency that has been the subject of more criticism than a poorly written novel. Its bull runs have often resembled a rollercoaster designed by a mad scientist, with sudden drops that would make even the bravest investor clutch their pearls. 💸

But lo and behold! The latest bull market, which kicked off in early 2023, feels like a gentle breeze rather than a hurricane, showcasing a delightful low volatility and fewer dramatic drawdowns. Who would have thought? 🤔

Volatility in downtrend

According to the wise sages at Glassnode, Bitcoin’s realized volatility on a three-month rolling basis has averaged less than 50% during this bull cycle. This is significantly lower than the 80% to 100% observed during previous bull runs, which were more chaotic than a cat in a room full of rocking chairs. 🐱

And the 30-day implied volatility? Well, it’s been on a downtrend too, as tracked by Volmex’s BVIV index. This metric is like a crystal ball, predicting the expected price turbulence over a specific period. Spoiler alert: it’s looking calmer! 🔮

The newfound stability likely comes from Bitcoin’s ever-expanding market capitalization, which is now so large it could probably buy a small country (or at least a decent-sized island). This growth has attracted institutional investors like moths to a flame, thanks to ETFs and derivatives. 🔥

“With a market cap over $2 trillion, Bitcoin now ranks as the 7th largest asset worldwide,” Glassnode proclaimed, sounding like a proud parent. “As liquidity deepens, the capital required to move the price becomes larger than a dragon’s hoard.” 🐉

“Moreover, the launch of US Spot ETF Products, along with increasing regulatory clarity, has transformed the investor base, allowing sophisticated investors to dip their toes into the Bitcoin pool for the first time,” they added, probably while sipping tea. ☕

Stair-step rally

Now, if you pull up the price chart from 2020-21, you’ll see Bitcoin’s bull run from $4,000 to $70,000 had more ups and downs than a kangaroo on a pogo stick. A drawdown of over 20% is usually considered a bear market in traditional markets, but Bitcoin? It just laughs in the face of danger! 😂

Now, compare that to the rally from about $30,000 to over $100,000 since March 2023. It’s been a stair-step ascent, like climbing a mountain of chocolate cake—one delicious step at a time! 🍰

“We’ve observed a shallower drawdown profile compared to previous bull markets, with current cycle drawdowns generally less than -25% from the local high,” Glassnode noted, sounding like a proud statistician. “Only two instances exceeded -30%!” 🎉

This change in character is again linked to institutional participation, lower leverage, and a general reduction in speculative excesses. Major exchanges, including Binance, used to offer 100X leverage during previous bull runs, allowing investors to control positions larger than their wildest dreams. But that also led to liquidation cascades and price corrections that could make a grown man cry. 😢

However, exchanges have since decided to cut down on the leverage, curbing speculative excesses. And that, dear reader, seems to have contributed to the sturdier rally this time around. Who knew less could be more? 🤷‍♂️

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2025-05-30 12:07