Despite growing expectations of a bitcoin rally, participation in the spot market is dwindling, leaving the market vulnerable to erratic price movements. The trading volume of bitcoin has recently dropped below $8 billion, its lowest level since October 2023, according to data from Glassnode.

This decrease in volume, which has been ongoing since reaching highs of over $25 billion in early February, could lead to reduced market depth and increased sensitivity to changes in market flow. As a result, even small orders can significantly impact prices, potentially boosting market volatility.

However, options traders do not seem to be factoring in this scenario at present, as indicated by the Volmex BVIV index, which measures expected 30-day price swings and has dropped to three-month lows below an annualized 42%. The Federal Reserve's upcoming interest rate decision, scheduled for later today, is also likely to have a significant impact on the market.

A hawkish statement could lead to a prolonged pause in rate reductions, potentially capping gains in risk assets. Marex analysts note that 'bitcoin is sitting around 77k and trading like a market that does not want to commit ahead of the Fed,' with cautious positioning, thinner liquidity, and a higher likelihood of the next impulse coming from macroeconomic factors rather than crypto-specific events. The recent decision by the UAE to leave OPEC and OPEC+ has also introduced uncertainty into the energy market, which could have far-reaching implications for risk assets.

As of now, BTC is trading near $77,800, up over 1% in the past 24 hours, with other major cryptocurrencies such as ether, solana, and XRP experiencing similar gains. The CoinDesk Memecoin Index is leading the market, with a 3% increase, 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, albeit slowly. Analysts emphasize that oil price volatility holds the key to the performance of all assets, with the yield on the 10-year U.S. Treasury note closely tracking swings in WTI crude prices.

As the risk-free rate in traditional finance, changes in the 10-year yield can have far-reaching implications for financial markets, including cryptocurrencies.