Even as calls for bitcoin to gather further grows, participation in the spot market cools, leaving the door open to erratic price action.
Trading volume, the dollar value of BTC changing hands in a day, has recently dropped to less than $8 billion, according to Glassnode. It is the lowest since October 2023, when bitcoin was less than $40,000. Volume has been declining since reaching heights above $25 billion in early February.
“Such low-volume environments often coincide with reduced market depth and increased sensitivity to flow shifts,” 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 shrinks, it means that a few large orders can move prices significantly. In other words, the falling volume could end up increasing market volatility, although options traders don’t seem to be considering this scenario for now.
Volmex’s BVIV index, which measures BTC’s expected 30-day price volatility, has fallen to a three-month low below an annualized level of 42%. Clearly, traders are positioned for calm, not turmoil.
That’s notable, especially since the Fed sets interest rates later today. No one expects a change; attention will focus on what the policy statement has to say about disruptions in the energy market and rising prices at petrol stations. A hawkish statement expressing concern about growth and inflation risks could mean a longer pause in rate cuts and even possible rate hikes, limiting gains in risk assets.
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“Bitcoin is sitting around 77,000 and is trading like a market that doesn’t want to bind ahead of the Fed. The band is calm on the surface, but it’s not relaxed. Positioning is cautious, liquidity is thinner, and the next impulse is more likely to come from macro than any other crypto-native,” Marex analysts said in a morning note.
“The big macro curve is energy policy. If energy becomes less predictable, risk assets remain headline sensitive,” they said, noting the UAE’s Tuesday decision to leave OPEC and OPEC+.
BTC recently changed hands near $77,800, up over 1% in 24 hours, with ether (ETH), solana (SOL), and XRP adding similar amounts. The CoinDesk Memecoin Index led the market higher, up 3%, followed by the Computing Select Index, which rose 2.7%.
In traditional markets, the dollar index, which is inversely related to bitcoin’s price, continues to stay below 100, with no bullish momentum. However, yields on the 10- and two-year US Treasuries continue to rise, albeit slowly. Pay attention!
Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead.”
What is trending
Today’s signal
Analysts are not wrong to say that oil price volatility is the key to all assets. As the chart shows, the yield on the 10-year US Treasury bond closely tracks fluctuations in WTI crude oil prices.
The 10-year yield is considered the risk-free rate in traditional finance, and lending across the wider economy and markets occurs at a premium to this rate. So when it rises, interest rates across the financial markets also rise, tightening financial conditions.
So if crude oil rises further, the 10-year yield could follow suit, potentially destabilizing financial markets, including cryptocurrencies.
