What drives the cyclical fluctuations of BTC? In the early years, BTC had achieved a volatility of over 100% per month, but now it is consistently around 30% to 50%, which is due to asset maturity and has nothing to do with the cycle. By removing this factor, a sequence of ups and downs around the trend is obtained, with bull tops and crashes rising to the top and sideways dips falling to the bottom. This is the cyclical part (as shown in Figure 1). Then, we fit a certain variable that affects BTC price fluctuations to this sequence, which can approximately determine the proportion of that variable in the impact. Speaking in person, that is, how much influence or explanatory power a certain factor has on BTC volatility. The logic is finished, now let's take a look at the data results (as shown in Figure 2): 1. The top three in terms of influence are all coin holding structures LTH supply accounts for 19%, non current supply accounts for 12%, and livelines (activity) accounts for 11%. These three are all talking about how many chips remain in the hands of long-term holders. The more chips there are, the fewer chips will participate in turnover, and the volatility will naturally decrease. On the contrary, when LTH starts to move, usually corresponding to distribution or surrender, then the volatility returns. 2. The second tier is leverage The absolute value of the funding rate accounts for 11%, the leverage ratio accounts for 9%, and the futures position/market value accounts for 8%. The impact of futures contracts on volatility cannot be ignored. But being placed at the back of the chip structure means that leverage mainly serves to amplify, and the source of volatility is still in the chips. Whoever has chips has the right to speak! 3. The "market value" factor only accounts for 3%, which is on the same scale as the circulation speed of the currency. In addition, the impact of option OI is lower. The final conclusion is that the cyclical fluctuations in volatility are mainly determined by who holds the chips, rather than by the increase in market value. Currently, LTH holds a total of 1474 BTC, accounting for 74% of the total circulation; This is the real reason for the continuous convergence of BTC volatility. In the future, it will also become a normal path. ---------------------------------------------------------- Finally, another digression: I see that there are still some friends who expect BTC to fall to $3-40000 in this round. That is to say, a further drop of 50-60% on the existing price basis. Assuming this conclusion holds, there is only one factor that can cause such significant fluctuations in BTC, which is the sudden influx of LTH chips into the market. You should know that BTC fluctuated sideways for 6 months from February to August in this round, with multiple negative events causing market panic, while LTH net holdings continued to rise, which is a clear indication of the problem. So, what kind of events will happen in the future that will force LTH to give up its long-term holdings of chips and future discourse power? If not, then the expected "3-40000" BTC will ultimately be just wishful thinking .....