Even when asking for bitcoin Interest rates are rising, spot market participation is cooling, leaving the door open for erratic price action.
Trading volume, the dollar value of BTC that changes hands in a day, has recently fallen to less than $8 billion, according to Glassnode. It is the lowest level since October 2023, when bitcoin cost less than $40,000. Volume has been declining since reaching highs above $25 billion in early February.
“These low volume environments often coincide with reduced market depth and increased sensitivity to flow changes,” Glassnode said.
Market depth, typically measured by looking at buy and sell orders within 2% of the current price, is widely used to assess liquidity, or the market’s ability to absorb large orders at stable prices.
When market depth narrows, it means that a few large orders can move prices significantly. In other words, decreasing volume could end up increasing market volatility, although options traders don’t seem to be considering that scenario for now.
Volmex’s BVIV index, which measures BTC’s expected 30-day price swings, has fallen to three-month lows down 42% annualized. Clearly, traders are positioned for calm, not turmoil.
It’s notable, especially since the Federal Reserve sets interest rates later today. Nobody expects a change; The focus will be on what the political declaration has to say about energy market disruptions and rising prices at the pump. A hawkish statement, expressing alarm about growth and inflation risks, could mean a prolonged pause in rate cuts, and even possible rate hikes, limiting gains in risky assets.
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“Bitcoin is around 77,000 and is trading as a market that does not want to commit ahead of the Fed. The tape is calm on the surface, but not relaxed. Positioning is cautious, liquidity is tighter and the next push is more likely to come from macro than from any crypto native,” Marex analysts said in a morning note.
“The big macroeconomic curve is energy policy. If energy becomes less predictable, risk assets remain sensitive to headlines,” they said, highlighting Tuesday’s decision by the United Arab Emirates to leave OPEC and OPEC+.
BTC recently changed hands near $77,800, up more than 1% in 24 hours, with ether (ETH), solana (SOL), and XRP adding similar amounts. The CoinDesk Memecoin Index leads the market higher, with gains of 3%, followed by the Computing Select Index, which is up 2.7%.
In traditional markets, the dollar index, which is inversely related to the price of bitcoin, remains below 100, lacking bullish momentum. However, the 10-year and two-year US Treasury yields continue to rise, albeit slowly. Stay alert!
Read more: For an analysis of current activity in altcoins and derivatives, see Crypto Markets Today. For a complete list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is trend?
Today’s sign
Analysts are not wrong when they say that oil price volatility is the key to all assets. As the chart shows, the yield on the 10-year US Treasury bond closely tracks swings in WTI crude oil prices.
The 10-year yield is considered the risk-free rate in traditional finance, and lending across the economy and markets is made at a premium to this rate. So when it rises, interest rates in financial markets also rise, tightening financial conditions.
Therefore, if crude oil rises further, the 10-year yield could do the same, which could destabilize financial markets, including cryptocurrencies.
