Bitcoin

The strange case of the price rising and the volume falling

Metrics tracking Bitcoin volume show drop, while price rehearses new highs

Bitcoin recorded a weekly gain of 6.29%, when the price left the upper downward trend line and entered the $11,000-$12,000 zone, an increase that brought euphoria to the crypto markets, in general the entire ecosystem benefited from the Bitcoin rally. Overall, the market capitalization of cryptomorphs rose to US$366 billion, from US$347 billion last Monday, according to figures from CoinGecko.

As last week’s recovery was caused by news involving Square which reported that it has invested 1% of its resources in Bitcoins, while Fidelity said it will allocate 5% of its portfolio to Bitcoins. All this good news has led Bitcoin to the rally that has been observed over the last few days.

However, there is one piece of data that seems to be out of touch with price: volume.

Volume of Bitcoin remains below its price

The volume remains one of the most important metrics to be observed on Bitcoin. Even though its price has been strong in the last few days, the volume of the currency is still below its price, according to Nomics data.

Bitcoin has accumulated a rise of 6.29% in the last week, while volume has accumulated a drop of -6.91% in transparent volume, measured by Nomics.

The same phenomenon had been observed by CryptoCompare and IntoTheBlock.

In the IntoTheBlock database, this drop shown on the above chart by the blue ones at the base of the chart, is more evident, as can be seen below.

The cumulative drop in the volume of exchanges over the last 7 days was -12.02% and over the last 30 days -43.08%.

Where did the volume surplus go after all?

Analysing the data obtained by Glassnode, one can see that the excess volume that was in the exchanges in the spot market and went to the Bitcoins Futures market operated in the large derivatives exchanges: Binance, Bitfinex, BitMEX, CoinFLEX, Deribit, FTX, Huobi and Kraken.

On the whole there was an increase in future trading, CME also released the latest data (on 6 October) on Bitcoin futures positions on 10 October. The market remained stable and open contracts increased from 7,324 to 7,511, interrupting a two-week sequence of contraction. This followed the fall in the volume of futures trading at BitMEX, which is in the sights of the US authorities.

According to the report, the accounts of resource managers with long positions increased from 525 to 703, an increase of 33.9%.