The amount of Bitcoin that is being traded has significantly decreased during the previous few days. The daily trading volumes of Bitcoin across the major exchanges reached their lowest level since March 5th, according to data that was sourced from CoinGecko. On Monday, the volume of Bitcoin trading plummeted to as low as $14.5 billion.
Around the beginning of this month, Bitcoin daily trade volumes skyrocketed to a high of $70 billion, marking the largest level since the aftermath of the FTX collapse in November of last year. This is a significant reduction from that level.
It is disconcerting to see a decrease in the amount of transactions.
It may indicate that investors’ interest in purchasing Bitcoin at present levels in the upper twenties is declining, which would come at a time when US regulatory concerns are growing, and anxieties about a US financial catastrophe are decreasing.
It’s possible that this is a consequence of the recent failure of crypto-friendly institutions in the United States earlier this month, which resulted in fewer fiat-to-crypto on-ramps being available (most notably, the collapse of Silvergate).
The precipitous drop in Bitcoin prices from the mid-$22,000s to below the $20,000 mark, which was seen earlier this month, is cause for concern. This drop was preceded by a drop in Bitcoin volumes, which occurred earlier this month.
Bitcoin bulls will be hoping that the cryptocurrency does not face a dip in price like the one that occurred recently to the crucial support located around $25,000.
Recent deterioration seen in many indicators indicating activity on the Bitcoin network is contributing to the negative fears that have been circulating.
CFTC’s Binance Lawsuit Weighs on Volumes
The decline in trading volumes started before the US Commodities Futures and Trading Commission made public its intention to file a lawsuit against Binance. Nonetheless, the lawsuit won’t in any way improve the situation.
If Binance is set to be classified as an unregistered or unlicensed exchange in the United States, then major market makers and institutional players participating in cryptocurrency will be more hesitant about associating with the exchange.
Binance is the cryptocurrency exchange that handles the lion’s share of trading volumes. Binance was responsible for a staggeringly high degree of market dominance in February, according to data that was published by The Block. Binance was responsible for 62% of the global crypto trade volumes.
However, since they discontinued offering zero-fee trading for Bitcoin pairings, they have been losing some of their previous dominance.
The drop in what is referred to as Bitcoin’s 2% market depth as of late has received a lot of attention within the cryptocurrency sector.
This is the number of buy and sell orders that are waiting to be filled on exchanges that are within 2.0% of the price at which the asset is currently being traded.
When the market depth of 2% falls, it becomes simpler for huge orders to influence the price of bitcoin, which results in a market that is more prone to wild price swings.
Option Investors Remain Sanguine on Volatility Risks
Option Investors Have a Positive Attitude Toward the Risks of Volatility
Investors appear to be somewhat unconcerned about the possibility of Bitcoin’s price fluctuating despite the continued thinning of Bitcoin’s market depth and the dramatic recent drop in trading volumes. At least, it seems to be the message from the pricing of options markets.
The Bitcoin Volatility Index (DVOL) developed by Deribit has been trending downward in recent days, falling from prior monthly highs of 73 to its most recent value of around 62.
It is significantly higher than earlier March levels in the vicinity of 50, although it is still very modest when compared to historical standards. The Bitcoin derivatives market is dominated by the Deribit exchange.
Despite the fact that Bitcoin may be in for a rough ride in the near term, many analysts believe that Bitcoin’s outlook in the longer term remains positive.
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