NounsDAO on the Brink of Treasury Division Split Amidst 'Rage Quit' Uprising by NFT Holders

MicroStrategy's Significant Bitcoin Impairment Losses May Mislead: Berenberg

Binance Supercharges Bitcoin and Ether Trading in Argentine, Brazilian, and South African Currencies with Exciting Fee Promotion

The daily trading volume ratio of Bitcoin (BTC) in spot and derivatives markets has dropped to its lowest level in 11 months, indicating a resurgence of speculative trading in the cryptocurrency market.

According to data collected by CryptoQuant, a blockchain analytics firm based in South Korea, the ratio has plummeted by almost 80% within a three-month period, hitting a low of 0.117. This is the same level that was last observed on May 16, 2022.

The decrease is occurring despite a 70% increase in bitcoin's price year-to-date, suggesting an enhanced appetite for risk in the crypto market and the possibility of price instability.

The decline in bitcoin's value has been steep since it encountered significant resistance above $28,500 on March 21. This indicates that speculators have been investing in bitcoin at a faster pace compared to retail investors and long-term holders.

"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 weak ground if the rally was indeed purely driven by an increase in leverage," Markus Thielen, head of research and strategy at Matrixport, said, noting the decline in the volume ratio.

"As the on-ramp from fiat into crypto has become materially more difficult with the likes of Silvergate and Signature Bank being taken over by the regulators. This would suggest that the amount of liquidity has remained the same within crypto but has been allocated to higher leverage products," Thielen added. 

The spot market serves as a venue for immediate exchange of financial instruments, while derivatives encompass a range of products, such as futures and options, that derive their value from an underlying asset and involve leverage which can amplify gains and losses. These derivatives are typically traded for delivery at a later date.

Source Coindesk