According to analysts at Bitfinex, as depicted in this week’s Bitfinex Alpha report, this increase in new market participants indicates that we may be in the early stages of a Bitcoin bull market.
BTC derivatives volumes have started to have a greater influence on Bitcoin prices, with derivatives trading increasing at a faster rate than spot trading volume, which in turn is driving volatility. Options volumes are also peaking, signalling that institutional investors are increasingly participating in the market.
Bitcoin spot, derivatives, and options trading volumes
According to the analysts at Bitfinex, the weekly Bitcoin spot trading volume recorded its highest-ever reading last week, as the 7-day Moving Average of Bitcoin trading volumes on exchanges rose to around $24 billion.
The derivatives market also saw the trading volume of Bitcoin futures across various exchanges come close to $1 trillion, while Bitcoin options open interest rose to $12.14 billion. This suggests that institutional investors are increasingly participating in the market something that indicates that we may be in the early stages of a bull market.
According to the analysts, even though the increased activity might sound enticing to investors, it is generally followed by increasing volatility.
The analysts also stated that:
“The BTC Long-term Holder (LTH) Spent Output Profit Ratio (SOPR) is now returning to a level greater than one, on multiple timeframes, indicating that coins are being moved at a profit. The behaviour of long-term Bitcoin holders selling their coins during current market conditions is consistent with previous bear market trends, which is a positive signal for the market.”
They further added:
“When comparing the supply held by long-term holders (LTH) to the supply last active one year ago or longer, it is clear that the former is declining while the latter is steadily increasing. As a result, the liquid supply of Bitcoin remains limited and is becoming even more so as this latter group continues to buy and hold. This is also healthier for the market as this represents supply distribution rather than HODLers losing conviction”
Bitcoin bull market prospects
Bitcoin price hit a multiple-high above $28,683 mid-last week at the height of bank collapses in the US, something that some believe was responsible for the Bitcoin rally.
BTC price has however since then consolidated and was at $26,950.60 at press time. If Bitfinex analysts’ market analysis is anything to go by, the market could see a Bitcoin bull market that would see it try to break above $30,000 anytime from now especially seeing that it is currently in consolidation.