|
|
Edited by Kamal531 at 2023-9-9 10:01
It has erased all gains since Grayscale's legal victory. According to Terminal data, after the announcement of Grayscale's legal victory, Bitcoin briefly surged to over $28,000 and is currently retracing around $25,700, down 11.4% in the past 30 days. Some industry analysts suggest that, amid low trading volume and liquidity, Bitcoin may retreat to $23,000.
Low Trading Volume and Liquidity
Bitcoin's trading volume and liquidity have been at extremely low levels recently. According to Bitfinex's latest report on Tuesday, the Bitcoin spot trading volume on centralized cryptocurrency exchanges (CEX) in August reached the lowest monthly level since October 2020.
The report added, "Spot trading volumes denominated in assets have reached historical lows, and spot trading volumes have been declining overall for several months." Bitfinex analysts stated that this indicator indicates "a decline in confidence in Bitcoin and the broader cryptocurrency space."
The Bitfinex report emphasizes that the current cryptocurrency market has extremely low trading volume and liquidity. This low liquidity environment makes the cryptocurrency market susceptible to significant price fluctuations even with low trading volumes.
Derivatives Trading Volume is 20 Times Higher Than Spot
The Bitfinex report also mentioned an increase in trading volume on derivatives exchanges in mid-August, corresponding to the liquidation of leveraged positions worth over $1 billion on August 17th. Bitfinex stated that derivatives have been a driving force in the current market environment.
It also pointed out that the data shows a further contraction in spot trading volume compared to derivatives trading volume. The Bitfinex report mentioned, "Yesterday's data shows that the trading volume of derivatives on major exchanges is 20 times that of spot trading volume."
Trading volume for digital asset investment products has also decreased. Bitfinex analysts stated, "This week, the total trading volume for these investment tools has decreased to $1.3 billion, down 16% from the yearly average."
Bitcoin Derivatives Indicate a Decrease in Long Demand
Analyst MARCEL PECHMAN tweeted that Bitcoin monthly futures' trading prices typically have a slight premium over the spot market, indicating that sellers are demanding more capital to delay settlement. Therefore, healthy BTC futures contracts in the market should trade with an annualized premium of 5% to 10%, known as futures premium. Bitcoin currently has a 3.5% futures premium (basis), the lowest level since mid-June (before BlackRock applied for a spot ETF), reflecting a decrease in demand from leveraged buyers using derivative contracts.
The analyst also stated that traders should analyze the options market to understand whether recent adjustments have made investors less optimistic. When arbitrage platforms and market makers charge excessive fees for upside or downside protection, a 25% Delta deviation is a clear sign.
In summary, if traders anticipate a decline in Bitcoin's price, the Delta indicator will rise above 7%, and negative deviations of 7% often occur during hot market conditions. Recently, the 25% Delta deviation for options has entered the bearish zone, with protective puts selling for a 9% premium on September 4th.
Continued Bearish Sentiment in the Market
Bearish sentiment is on the rise in the market. Last Tuesday, optimism briefly faded after Grayscale's legal victory against the U.S. Securities and Exchange Commission (SEC). Since then, Bitcoin has retraced all gains after reaching a recent high of $28,100.
On August 31st, the SEC extended the decision deadline for 7 ETF applications by 45 days, further dampening investor enthusiasm. More and more people believe that the approval of a U.S. Bitcoin spot ETF may face further delays.
Due to a lack of sustained liquidity and trading volume, the key investor sentiment indicator, the "Fear and Greed Index," has been trending down in the past 30 days, shifting from neutral sentiment to fear. The market may need more time than previously expected to receive bullish catalysts.
Falling to $23,000?
Considering the lack of trading activity, Mike Crosbie, CEO of Blackfridge Exchange, stated in an interview with Bloomberg that the market structure does not inspire much confidence. Crosbie believes, "As long as the $28,000 level remains breached, Bitcoin could fall to around $23,800."
Historically, September has been a challenging period for BTC prices, with cryptocurrencies experiencing negative monthly returns every year since 2016. Cryptocurrency asset management company QCP Capital predicts that the largest cryptocurrency may drop to $23,000 by early October.
However, K33 Senior Analyst Vetle Lunde stated in his report that the current price level (at the time of writing, $25,760) provides buying opportunities for longer-term investors. He said, "From all perspectives, this is a buyer's market, and it is not wise to hoard Bitcoin at current levels.
|
|
Post time 9-9-2023 06:24:09