Glassnode: The Real Reason for BTC's Low Volatility Is Long-Term Holders Locking Up Their Chips, and the Temporary Steady State Could Be Broken at Any Time

BlockBeats News, September 8 — Glassnode's latest analysis indicates that Bitcoin's current volatility is at historic lows, but market cap growth is not the true suppressor of volatility. Regression model tests examining the explanatory power of various variables on "detrended realized volatility" reveal that the supply share of long-term holders (LTH) is the strongest factor, with explanatory power nearing 19% to 20%, far surpassing other metrics. Illiquid supply follows at approximately 12%, and activity levels rank third at around 11.5%. In contrast, market cap itself holds only about 3.5% explanatory power, ranking near the bottom, while the stablecoin ratio is nearly zero.

This implies that the intuition that "Bitcoin's volatility declines as its market cap grows" does not hold. The more BTC is concentrated in the hands of long-term holders who rarely trade, the fewer floating supplies are available for sell-offs and short-term speculation, resulting in lower realized volatility. The key lies in the fragility of this structure: low volatility does not signify a market mature enough to avoid sharp swings; rather, it resembles floating supply being locked away. Once long-term holders begin distributing and illiquid supply becomes active again, volatility can rebound swiftly from low levels. Leverage, funding rates, and futures open interest do exert influence, but all rank behind the coin-holding structure. The current "dull" market appearance is essentially a temporary steady state driven by token distribution, not a structural permanent change.