The bitcoin market has hit a phase of tranquility, where investor enthusiasm has cooled, and speculative activity has sharply decreased. According to a thorough report from Glassnode, this quiet spell might be setting the stage for an uptick in market volatility.

Glassnode Analysis Shows Bitcoin Market Entering a Tranquil Phase Amid Decline in Speculative Activity

Glassnode’s latest onchain findings reveal a significant dip in net capital inflows into the bitcoin market, hinting at a balance between investors cashing out profits and cutting losses. This balance is highlighted by the Sell-Side Risk Ratio, showing that most bitcoin transactions are happening around the same price at which they were originally bought. Glassnode suggests that this period of low volatility and neutral profitability could be just a calm before the storm.

“Historically, periods of quiet and calm market structure are short-lived, and often precede an expectation for heightened volatility,” Glassnode’s analysis states.

Researchers at Glassnode point out that the current market conditions signal a complete reset in speculative activities, especially in perpetual swap markets. Speculation in these markets has dropped dramatically, as shown by the reduced volume of liquidations. This reset isn’t limited to bitcoin but extends across the wider digital asset space. The neutral funding rates for various tokens further confirm that the market has shifted towards a more stable, spot-driven environment.

The report notes:

This phenomenon can also be observed across the broader digital asset ecosystem, with a vast swathe of tokens now displaying a neutral funding rate. This underscores the idea that a major reset in speculative interest has occurred across the entire market, and therefore, spot markets are likely to be in the driver’s seat for the near term.

The report also explores the behavior of bitcoin holders, especially short-term ones who are increasingly becoming long-term holders. Coins that have been held for three to six months, now making up over 12.5% of the circulating supply, are close to transitioning into long-term status. This shift suggests that a large portion of the market is choosing to hold onto their assets despite the waning speculative interest. Glassnode concludes that while this market calm may persist for a while, historical trends indicate that a return to higher volatility could be just around the corner.