The cryptocurrency market is experiencing another roller coaster week, with the price of Ether (ETH) falling below $ 3,000 and the Bitcoin (BTC) price hitting a low of $ 37,700 in recent months. The stock market also struggled to sell, fearing a change in the next rate hike for investors in the Federal Reserve.

So far, the price of bitcoin has fallen 41.72% from its all-time high of $ 69,000, although the price is likely to have a deeper dip in the data of various chain and derivatives when some describe it as a bear market, and the institutional investors’ motivation for the BTC price action. Factor.

Permanently regulates the volume of futures trading
Since 2017, the cryptocurrency market has undergone many changes, with the bitcoin market dominating the spot trade, with derivatives accounting for a small portion of the trading volume.

According to a recent report by Glassnode, a chain of market intelligence companies, bitcoin derivatives “now represent a major area in price discovery” and “future trading volumes now represent a variety of spot markets.”

This will have a significant impact on the current price movement of BTC as futures trading has been declining since January 2021. The figure fell to its current high of $ 80 billion a day from 30.7% in the first half of 2021. Billions per day.

Bitcoin futures. Source: Glassnode
At the same time, the perpetual futures market has surpassed the traditional calendar futures as a preferred trading tool because they are more compatible with the price of the spot index, and the cost of paying BTC is much lower than that of traditional commodities.

According to Glassnode, “the current open interest in permanent exchange is equivalent to 1.3% of the bitcoin market, which is nearing an all-time high.”

Nonetheless, the calendar’s overdue futures and total leverage have led to a decline in leverage, indicating that “the right amount of capital will leave the bitcoin market.”

The reason for this capital turnover is probably due to the fact that the yield on the futures market is just over 3.0%, which is 0.1% higher than the 10-year US Treasury yield, below. 8.5% US Consumer Price Index (CPI) Inflation Pressure.

Bitcoin is based on 3 months of annual capital. Source: Glassnode
Glassnode said,

“Perhaps a decline in trading volume and a general open interest rate could be a sign of the inflow of capital bitcoin derivatives and a shift towards higher yields and a lower risk of perceived risk.”
Related: Traders have flagged the price level of BTC and seen that the bitcoin is still at a $ 30K “ultimate low” risk.

Chain data shows the adoption of large units
As you move away from the derivatives market, you can find more positive signals for the future of Bitcoin by digging deeper into the chain data.

Since October 2020, the turnover has exceeded $ 10 million, from 10% of the day-to-day turnover, to the current average daily dominance of 40%.

According to Glassnode, this represents a “significant increase in the value-added settlement for institutional-sized investment / business entities, managers and high-net-worth individuals.”

The relative volume of bitcoins is broken down by size. Source: Glassnode
Combining network value with trading value (NVT), using the total trading volume, the current value of Bitcoin ranges from $ 32,500 to $ 36,100.

Bitcoin NVT price model. Source: Glassnode
According to Glassnode, both the 28-day and 90-day NVT models have “started moving downward and heading in a bearish direction”, breaking the 28-day 90-day mark, which has historically been a “positive medium and long-term signal.” . ».

The total market value of cryptocurrency is now $ 1.71 trillion, with a bitcoin dominance of 41.5%.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Every investment and trading activity involves risk, and you have to research it yourself when making a decision.

Source: CoinTelegraph