Key Takeaways
- The price of Bitcoin has been suspiciously stable following the epic collapse of FTX less than 2 months ago
- The whales are defending the Bitcoin price at $16,000 waiting for interest to flood back into Bitcoin
- It’s hard to imagine a bigger hype train than 2021 which means Bitcoin may not make a new all-time high
An Artificial Market
The Bitcoin market has completely flat-lined since November 9th. This was directly after the FTX collapse, which I wrote about back in November . In that analysis, I mentioned how I had been raising concerns before the collapse about how quiet the Bitcoin market had looked over the summer of 2022.
In the lead-up to the Three Arrows and Luna collapse, the Bitcoin market had been seeing major weakness from November 2021 up through May 2022, falling from $67k to $30k. This weakness actually helped perpetuate the collapse of Luna and Three Arrows.
The collapse in Luna and Three Arrows then caused the price of Bitcoin to drop below $20k. Looking like it could drop to $10k in short order. However, immediately following the drop below $20k, the market stabilized until the FTX collapse. Which pushed the price down another 20% to the $16k region.
Since FTX collapsed, the market has gone even quieter. The price has been bouncing between a very tight range of 16.5k and 17.5k for almost two months now.
The chart below shows this price action compared to the S&P 500. While the S&P has continued to bounce around the last two months, Bitcoin has gone incredibly quiet. This seems extremely unlikely after such a major event unless interested parties are in the market defending the price.
One of the primary metrics used to evaluate price fluctuations is volatility. This is the standard deviation of the price, annualized. The chart below shows the volatility of the S&P and Bitcoin going back to early 2021.
As can be seen, the volatility in Bitcoin is consistently above the S&P 500 by a wide margin. Bitcoin tracked around 75% whereas the S&P was around 15%. It should be noted that the volatility lines below are actually correlated, as the S&P became more volatile so did Bitcoin. That remained true until the Fall of 2022.
The 30-day rolling volatility in Bitcoin plunged in October and actually dipped below the S&P volatility for a brief period on Oct. 24 . When FTX happened, volatility spiked, but it was very short-lived. On Dec 7th, the 30-day vol of Bitcoin was 77%. This plunged to 32% on Dec 12th as the trading period around FTX faded past 30 days. 30-day rolling Bitcoin volatility finished the year at 27%, dipping below the 28% low seen before the FTX spike.
Think about this! After each successive collapse, the market becomes more stable and less volatile . It’s not even seeing a price rebound as rumor/speculation becomes fact. You would expect either a price rebound if the bad news had been priced in or further selling if the market had not anticipated an event.
Figure: 2 SPY and BTC Volatility
This would be like the stock market flat-lining directly after the collapse of Lehman or the Covid lockdowns (the market actually saw massive turnarounds). One might argue that this is proof that Bitcoin is becoming more mature and cleaning out the deadwood. But this does not make sense because markets do not stabilize in the wake of such uncertainty. They become more volatile ! This is especially true when surrounding markets also increase in volatility.
Head over to SchiffGold to see the rest of the analysis and see how many more data points suggest manipulation!
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