Speculative movement reignites in Bitcoin ── the ratio of spot and derivatives is at a low level | coindesk JAPAN | Coindesk Japan

Bitcoin (BTC) spot and derivatives market daily trading volume ratio has fallen to an 11-month low, suggesting a resurgence of speculative activity in the crypto-asset (virtual currency) market. ing.

The ratio plummeted by nearly 80% in three months, hitting a low of 0.117, the level last seen on May 16, 2022, according to data tracked by South Korean crypto-asset analytics firm CryptoQuant.

The drop comes amid a 70% year-to-date surge in Bitcoin’s price, signaling increased risk tolerance and potential price volatility in the cryptocurrency market.

Bitcoin Spot to Derivatives Trading Volume Ratio (CryptoQuant)

The drop has been very steep since Bitcoin first hit a significant resistance above $28,500 on March 21. This shows that speculators are adding to Bitcoin at a faster rate than retail investors and long-term holders.

Markus Thielen, head of research and strategy at Matrixport, pointed to the decline in the volume ratio, stating that “crypto’s rise in 2023 was driven by diversification away from the US dollar and associated bank credit risk. The theory may be undermined if the rally was really driven by pure leverage increases.”

“The takeover of Silvergate Bank and Signature Bank by regulators has effectively made the on-ramp from fiat to crypto difficult. , suggesting that it is being allocated to higher leveraged products,” added Thielen.

The spot market is a platform for trading financial instruments with immediate delivery. Derivatives are contracts for products such as futures and options whose value is dependent on or derived from the underlying asset, with leverage that magnifies both gains and losses. Derivatives are traded for future delivery.

Spot market activity is usually equated with long-term investors. At the same time, derivatives are seen as proxies for sophisticated traders and speculators who place risky and leveraged bets to obtain well-funded and enhanced returns.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Image: CryptoQuant
｜Original: Bitcoin’s Spot-to-Derivatives Trading Volume Ratio Slides to Lowest in 11 Months