Bitcoin (BTC) New Ice Age: 5 Reasons for the Stagnation.

BTC prices have reached daily volatility of just around $85, down from thousands of dollars within days, or even a single day.

Bitcoin (BTC) was used as a store of wealth in the past when its price remained relatively predictable. For years, BTC had periods of long-term stability. Following the wide swings of the first half of 2018, it seems that now, BTC prices have been locked within a very tight range. The effects of this condition are manifold – from increasing the incentive to use BTC as a form of alternative savings account, to abandoning the markets altogether.

In any case, the recent stagnation may be caused by several factors working in unison to protect BTC prices at their current levels.

Tether (USDT) leaving the markets: When USDT tokens left the markets, the volatility of USDT decreased markedly. USDT speculation was one of the sources which caused BTC prices to move more actively. Now that the Treasury wallet has taken back more than 1 billion coins, and burned 500 million of them, USDT speculation on Bitfinex has slowed down, spreading across the markets.

Altcoins taking over speculation: Volatility may have been removed from Bitcoin, but for the sake of speculation, altcoins are always available. With stabilized BTC prices, the potential to trade altcoins and get more BTC earnings is a source of gains. Altcoins are charting their separate paths, and some are on a downward trend, but there is always room for speculation against BTC.

A self-fulfilling prophecy: There is simply not enough enthusiasm and belief in a year-end rally. Hence, no one is really interested in bidding for Bitcoin, having no more sense of FOMO as in the past months. Additionally, there are still expectations BTC prices may crash lower, under $5,000 and perhaps even under $4,000. The lack of hope for fast returns, one of the most appealing qualities of a volatile BTC price behavior, is causing fewer traders to bet on fast increases.

Lower Bitcoin usage: For months now, the use of the Bitcoin network has been extremely low. Transactions, as usual, are mostly for moving funds to exchanges.

Bitcoin quarterly monetary velocity at its lowest point since Sep 2010. Back then we were in the mining era [1] of the coin. Silk Road had yet to appear to drive velocity up and Mt Gox was 2 months old, speculation had barely begun. pic.twitter.com/82UDUiMlX6

— Willy Woo (@woonomic) October 29, 2018

Analysts are noticing that Bitcoin holders are getting into “savings mode”, with much less of the coin being used for its intended purpose as a means of payment. One of the reasons is that the status of Bitcoin transactions is a legal conundrum. Dark markets are moving toward privacy coins, including Monero (XMR), and the share of BTC is lower. One of the reasons is that law enforcement, and even ordinary users, are scrutinizing the record of wallets and making connections to infamous addresses.

Mining equilibrium achieved: Miners are currently happy with the reward of 12.5 BTC at prices near $6,500. Some mining farms have their break lower than that. The current BTC prices even work for some cloud mining schemes. Until the Halving of the reward in about two years, most miners will be happy to store up rewards and support their operations, while waiting for the Halving, which may boost BTC prices.

#bitcoin #hashrate is continuing it’s slow decline. The attached pic shows a 20MA trend, down to 50.2E today from a peak of 52.8E. Global avg. mining costs are likely a bit above the current market price. Miners are trimming production, but not dumping. Close to equilibrium. pic.twitter.com/Tyvy5l4VvN

— Quartermark (@quartermark) October 28, 2018

However, the equilibrium is rather fragile, and miners may need just a bit of a boost to continue adding hashing power. For now, BTC has some less active days as miners go offline or switch to other blockchains.