According to a report published by Bitfinex, spot trading volume in Bitcoin (BTC) on centralized cryptocurrency exchanges fell to its lowest monthly level since October 2020.
The published report revealed that spot volume by assets has reached historically low values and that spot volumes have generally decreased consistently for several months. Bitfinex analysts attributed this trend to declining confidence in the crypto sector due to regulatory uncertainty and market volatility.
According to the report, the crypto market is currently experiencing extremely low volume and liquidity, making the market vulnerable to large price fluctuations even with small trading volumes.
The report stated that trading volume on derivative exchanges increased in mid-August and over $1 billion in leveraged positions were liquidated on August 17. Bitfinex said derivatives are a driving force in the current market environment.
The report also noted that spot transaction volume decreased more than derivative volume. “Yesterday’s figures noted that derivatives volume was 20 times spot volume across major exchanges,” the Bitfinex report said, citing Monday’s data.
Bitfinex analysts stated in a note that pessimism is increasing in the market. The brief optimism following last Tuesday’s news that Grayscale had secured a legal win against the SEC has faded. Since then, Bitcoin has regained all gains made after recently hitting $28,100.
The SEC further tested investors’ enthusiasm by extending the decision period on seven ETF applications by 45 days on Thursday, August 31. “There is growing consensus that the US launch of a Bitcoin spot-based ETF could face further delays,” Bitfinex analysts added.
*This is not investment advice.
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Source: https://en.bitcoinsistemi.com/bitcoin-volume-on-exchanges-declined-to-2020-levels-what-does-it-signal/