- In August, the Bitcoin spot trading volume on centralized crypto exchanges reached its lowest monthly level since October 2020, according to Bitfinex’s Tuesday report.
- Bitfinex analysts added that there is an increasing consensus that the launch of a spot Bitcoin ETF in the US is likely to be further delayed.
- CryptoQuant data shows a decrease in both spot and derivative exchange volumes for Bitcoin since reaching its highest level since the beginning of the year on March 14.
Low volume and weak liquidity continue in the Bitcoin market; Could this mean that Bitcoin is losing trust? Current reports!
Volume Decline Trend Continues in Bitcoin
In August, the Bitcoin spot trading volume on centralized crypto exchanges reached its lowest monthly level since October 2020, according to Bitfinex’s Tuesday report. The report states that the monthly crypto spot trading volume for August was below $423 billion, the lowest level seen since October 2020.
The report added, “Spot volumes on an asset basis have historically reached low values, and spot volumes have been declining continuously for several months.” Bitfinex analysts said that this indicator indicates that “Bitcoin and the wider crypto asset sector are starting to lose trust.”
The Bitfinex report emphasized that the market is currently experiencing extremely low volume and liquidity. This low liquidity environment makes the crypto market vulnerable to significant price fluctuations even with modest trading volumes.
The report stated that the accumulation of trading volume on derivative exchanges in mid-August was consistent with the liquidation of leveraged positions exceeding $1 billion on August 17. Bitfinex said that derivatives are the driving force in the current market environment.
Additionally, reference was made to data indicating that the decline in spot trading volume is greater than the decline in derivative trading volume. The Bitfinex report noted, “Yesterday’s figures noted that derivative volume is 20 times the spot volume on major exchanges.”
Sentiment of pessimism in the market
In a note sent to COINOTAG by Bitfinex analysts, it was stated that market pessimism has increased. It is stated that the hopes that briefly rose after the news that Grayscale won a legal victory against the SEC last Tuesday disappeared. Since then, Bitcoin has retraced all its gains after reaching $28,100 recently.
On Thursday, August 31, the SEC extended the decision on seven ETF applications by another 45 days and continued to test investors’ enthusiasm. Bitfinex analysts added that there is an increasing consensus that the launch of a spot Bitcoin ETF in the US is likely to be further delayed.
The report stated that the data showed that the bull catalyst may take longer than previously estimated. After the SEC recently extended the decision periods for spot Bitcoin ETF applications, Bitfinex analysts said they believed that ETFs have “less pronounced impact on the prices of crypto assets.”
However, the report noted a positive sign in macroeconomic data from the US. The report said, “Wage growth in the US has slowed, which supports our view that inflation pressures have eased and interest rates will remain unchanged at the next FOMC meeting.”
Volume is decreasing
Both spot and derivative trading volume data indicate this lack of optimism. CryptoQuant data provides a perspective on how much trading volume has declined since reaching the highest level of the year on March 14.
CryptoQuant data shows a decrease in both spot and derivative exchange volumes for Bitcoin since reaching its highest level since the beginning of the year on March 14. On that day, spot trading volume was $831,000 and derivative volume was $2.7 million. This week’s Monday data showed that spot trading volume dropped to $20,000 and derivative volume was $355,000. When data from March 14 and September 4 are selected, this represents a decrease of 98% and 87%, respectively.
Trading volume for digital asset investment products has also decreased. Bitfinex analysts said, “The trading volume for these investment instruments decreased to a total of $1.3 billion this week, which is 16% below the annual average.”
Given the low trading activity, Blackfridge Exchange CEO Mike Crosbie sees “a market structure that does not encourage trust.” Crosbie said, “Unless the $28,000 level is lost, a level around $23,800 is expected for Bitcoin.”
