Even if calls for Bitcoin As prices rise, spot market participation cools, leaving the door open for erratic price action.
Trading volume, the dollar value of BTC changing hands in a day, has recently fallen to less than $8 billion, according to Glassnode. This is the lowest since October 2023, when bitcoin cost less than $40,000. Volume has been declining since peaking above $25 billion in early February.
“Such low volume environments often coincide with reduced market depth and increased sensitivity to flow changes,” Glassnode said.
Market depth, typically measured by looking at buy and sell orders within 2% of the current price, is widely used to assess liquidity or the market’s ability to absorb large orders at stable prices.
When market depth decreases, it means that a few large orders can move prices significantly. In other words, falling volume could end up increasing market volatility, although options traders don’t seem to be considering that scenario at the moment.
Volmex’s BVIV index, which measures BTC’s expected 30-day price fluctuations, fell to a three-month low, below an annualized rate of 42%. Clearly, traders are positioned for calm, not turmoil.
This is remarkable, especially since the Fed sets interest rates later today. No one expects change; Attention will focus on what the political declaration says about disruptions in the energy market and rising prices at gas stations. A hawkish statement, expressing concern over growth and inflation risks, could mean a prolonged pause in rate cuts, or even possible rate increases, thereby capping gains on risky assets.
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“Bitcoin is around 77,000 and trading like a market unwilling to commit ahead of the Fed. The band is calm on the surface, but it is not relaxed. Positioning is conservative, liquidity is thinner and the next push will likely come from macro rather than anything crypto-native,” Marex analysts said in a morning note.
“The big macroeconomic curveball is energy policy. If energy becomes less predictable, risk assets will remain sensitive to news,” they said, noting the UAE’s decision on Tuesday to leave OPEC and OPEC+.
BTC recently changed hands at nearly $77,800, up more than 1% in 24 hours, with ether (ETH), solana (SOL), and XRP adding similar amounts. The CoinDesk Memecoin Index leads the market higher, with gains of 3%, followed by the Computing Select Index, up 2.7%.
In traditional markets, the Dollar Index, which is inversely related to the price of Bitcoin, continues to remain below 100, lacking bullish momentum. However, yields on 10- and 2-year U.S. Treasury notes continue to rise, albeit slowly. Stay vigilant!
Read more: For analysis of current altcoin and derivatives activity, see Crypto Markets Today. For a full list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is the trend
Signal of the day
Analysts are not wrong that oil price volatility is key to all assets. As the chart shows, the 10-year U.S. Treasury yield closely tracks fluctuations in WTI crude prices.
The 10-year yield is considered the risk-free rate in traditional finance, and lending throughout the economy and markets occurs at a premium to this rate. So, when it increases, interest rates in financial markets also increase, which tightens financial conditions.
So if crude continues to rise, the 10-year yield could follow suit, potentially destabilizing financial markets, including cryptocurrencies.
