Despite growing calls for bitcoin to surge, spot market participation is dwindling, leaving the market vulnerable to erratic fluctuations. The daily trading volume of BTC has dropped to under $8 billion, its lowest point since October 2023, according to Glassnode. This significant decline in volume, which has been falling since reaching highs over $25 billion in early February, may lead to increased market volatility.
Market depth, a measure of liquidity, is also shrinking, making large orders more likely to cause substantial price movements. However, options traders are not currently factoring in this scenario, as indicated by Volmex's BVIV index, which has fallen to three-month lows below an annualized 42%.
The Federal Reserve's upcoming interest rate decision is also likely to impact the market, with a hawkish statement potentially leading to a prolonged pause in rate cuts and even possible rate hikes, capping gains in risk assets. Analysts note that the market is cautious, with thinner liquidity and a higher likelihood of the next impulse coming from macro factors rather than crypto-native ones.
The recent decision by the UAE to leave OPEC and OPEC+ has added to the uncertainty, with energy politics becoming a significant macro curveball. As the market awaits the Fed's decision, BTC has been trading near $77,800, up over 1% in 24 hours, with other cryptocurrencies also experiencing gains. The CoinDesk Memecoin Index is leading the market higher, with 3% gains, followed by the Computing Select Index, which is up 2.7%. In traditional markets, the Dollar Index remains below 100, lacking bullish momentum, while yields on the 10- and two-year U.S.
Treasury notes continue to rise slowly.