Experts record a decline in spot trading and mass long liquidations

As Bitcoin calmly drifts in a range of $25,000–$27,000, analysts have noted a decline in spot trading volumes and the risk of large liquidations in the derivatives market.

Where is the liquidity?

According to CryptoQuant, last week the spot-trading volume of the first cryptocurrency fell to 2018 levels — 8,000 to 15,000 transactions per day were recorded during this period.

By way of comparison, in March this year the average figure stood at 600,000 transactions.

According to analyst Caue Oliveira, the trend is driven by the economic situation in the United States.

«One of the main reasons is the growing fear regarding the macroeconomic scenario. The actions of the ФРС are perpetuating a constant sense of uncertainty, prompting investors to await a possible recession», he explained.

However, the latest change in Bitcoin’s price did not elicit any reaction.

In fact, the downtrend in spot trading has coincided with increased interest in hodling. However, in such circumstances, Bitcoin’s price gains are constrained by reduced liquidity.

«We observed a situation in which leveraged long positions on perpetual swaps tried to push the price of Bitcoin higher, but failed due to insufficient support from spot-market purchases», Bitfinex explained.

According to CoinGecko, Bitcoin’s price over the past week fell 3.4% to $26,165.

In the second quarter of 2023, total spot trading volume across the 20 leading Bitcoin exchanges fell by 36% — from $2.6 trillion to $1.66 trillion.

In September, Matrixport analyst Markus Thielen predicted a rise in Bitcoin’s dominance as risks of price declines rise for many well-known altcoins.