23 February, 2024

Bitcoin Investor Sentiment Remains Strong Despite Declining Trading Volume

7 months ago

04 Nov, 2023

  • Bitcoin trading volume has plunged 75% from March 2022 to July 2023, signaling decreasing speculative trading.
  • Long-term Bitcoin holders still refuse to sell, suggesting strong ongoing confidence in future price appreciation.
  • Declining spot market liquidity could increase Bitcoin price volatility if new capital inflows remain weak.

The Bitcoin spot vs derivatives volume ratio has significantly decreased in a surprising turn of events. As reported by a renowned crypto analytic firm CryptoQuant, since January 11 2023, the ratio has plummeted from 35% to a mere 6%. This drastic shift indicates that only 6% of the total Bitcoin trading volume is now on the spot market.

Notably, CryptoQuant.com, a leading source for cryptocurrency data, recently highlighted a potential shift in the Bitcoin market:

The stark drop in the volume ratio is further corroborated by the change in the total weekly trading volume of Bitcoin across all exchanges. In March, this figure stood at approximately 2.5 million BTC. However, by July, it had reduced to less than 600 thousand BTC, marking a more than 75% reduction over the specified period.

This trend, though seemingly concerning, might not necessarily signal a crisis. Instead, it could indicate that the cryptocurrency market is maturing, becoming more stable and predictable, and moving away from its previously volatile nature.

However, such a maturation phase could also bring about significant changes in the Bitcoin market. A decrease in spot volume might lead to a reduction in liquidity. This, in turn, could increase demand and the price of Bitcoin. It’s worth noting that the market currently lacks a new wave of optimism.

Bitcoin (BTC) is currently priced at $29,389.34, showing a slight increase of 0.32% in the last 24 hours. This price is highly dynamic and influenced by many factors, such as market demand, trading volumes, and global economic events. As the world’s leading cryptocurrency, Bitcoin’s price is closely followed by investors, traders, and enthusiasts.

Source: TradingView

The market capitalization of Bitcoin stands at an impressive $1.19 trillion, accounting for around 48.2% of the total cryptocurrency market dominance. This market cap reflects the total value of all circulating Bitcoin in existence. It serves as an important metric for assessing its significance within the broader digital asset ecosystem.

The trading volume for Bitcoin in the last 24 hours amounts to $26.88 billion, indicating significant daily activity in the market. High trading volumes could signify increased interest and participation, leading to higher price volatility.