Data shows a decrease in the Bitcoin spot and derivatives market ratio.
The spot-to-derivatives trading volume ratio for Bitcoin (BTC) has dropped to its lowest point in 11 months. Based on some experts, this downfall indicates a rebirth of speculative activity within the cryptocurrency market.
According to South Korea-based blockchain analytics firm CryptoQuant, the ratio has nosedived by nearly 80% over the past three months, hitting a low of 0.117.
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Based on the data, the Bitcoin spot and derivates ratio was this low on May 16th, 2022. This substantial drop aligns with a 70% year-to-date surge in Bitcoin's price, suggesting an increased risk appetite and price volatility.
At the time of writing, Bitcoin (BTC) retails for $28,641.51, recording a 1.08% increase in the last 24 hours.
The marked decrease in the ratio became especially apparent when Bitcoin faced significant resistance when it started retailing above $28,500 on March 21st. This pattern suggests that speculators have been entering the Bitcoin market at a faster pace compared to retail investors and long-term holders.
Commenting on the declining volume ratio, Markus Thielen, Matrixport's head of research and strategy, stated:
The theory that the 2023 crypto rally is driven by a diversification out of the USD and the associated bank credit risk might be standing on the weak ground if the rally was indeed purely driven by an increase in leverage.
On top of that, Thielen noted that the collapse of Silvergate and Signature banks made the "on-ramp from fiat into crypto" more difficult. Moreover, Thielen added:
This would suggest that the amount of liquidity has remained the same within crypto but has been allocated to higher leverage products.
The spot market is designed for trading financial instruments for immediate delivery, whereas derivatives are contracts encompassing a variety of products, such as futures and options.
Since March 10th, when the Bitcoin price fell below $20,000, it has recorded a price surge of 44%.
