The two custom indicators above are a perfect display of this. The BTC World displays the total traded Bitcoin over the top 17 Bitcoin Exchanges and currency pairs. It then separates the market from the spot traded currency pairs.
Spot is shown in green.
Future is shown in red.
The BTC Future Dominance indicator displays the percent value of the dominance of traded throughout the entire market.
Notice that the have remained dominate for the last 5 months, just after this ever-lasting bear trend started. Currently over 70% of the total in the market is alone.
Without separating the market from the BTC World , it just appears that the total traded has increased dramatically. In many markets this is a very good sign, unfortunately that is not the case here at all. People trading are only trading mere contracts of Bitcoin and no actual transactions of Bitcoin are taking place. All in turn, meaning that the future traded does not affect the price of bitcoin.
What does affect the price of Bitcoin is the spot market. This is the buying and selling of actual Bitcoin; not contracts. The BTC World indicator above shows how spot (green) has been plummeting since the all time high late last year. Just about the same time the market started its takeover.
Based on this analysis, I believe the spot market must redeem itself before there is any solid reversal for Bitcoin . However, at this time there is very little reason to trade actual Bitcoin over the market.
Here are just a few of those reasons:
- Volatility is dying, which is likely due to the market anyways. As it takes from the spot market that actually affects the price.
- Fees are significantly lower in the market. Market Makers are even paid for limit orders. This significantly beats the hefty percentage-based fees on traditional exchanges.
- High leverage. Some exchanges offer up 100x leverage on some currency pairs. Most traditional crypto exchanges don’t even offer 2x on the spot market.
- Bitcoin has been in a clear downtrend for over 6 months. There is no reason for people to buy and HODL at the moment.
- There is no solid news for Bitcoin. I believe a catalyst such as an announcement may be necessary for Bitcoin to make a full reversal.
If spot ever does make a return, I believe Bitcoin may have a fighting chance. However based on this data alone I believe BTC has found itself in quite the rut. We are in desperate need of some solid news and .
Then again, are used to stabilize traditional markets, why should Bitcoin be any different?
I hope you all found this analysis helpful and interesting!
I wish you all the best of luck!
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Driving Spot market rise does need solid trading volume, but it is not the same case for future market. Future market can stabilize Spot market, while guide the price movement. There is no ground for the idea that Future market volume absorption cause Spot market volatility loss and price downward movement. The truth is that before the price hits the Real Bottom, potential buyers would not like to take a move. So, the price downward with volume contraction means that we still have a long way to go to reach the bottom.