Bitcoin shines off as drop buyers remain scarce Crypto News

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The world’s largest cryptocurrency is languishing around $ 47,000, well below the highs of nearly $ 69,000 in early November.

The malaise surrounding Bitcoin runs far deeper than its price.

The world’s largest cryptocurrency is languishing around $ 47,000, well below the highs of nearly $ 69,000 in early November. A glance under the hood helps explain why: Trading volumes have dried up, open term interest has plummeted, and the number of active addresses has stagnated.

Taken together, the data paints a picture of the decline in animal minds following the Bitcoin spike following the launch in the fall of the first U.S. exchange-traded funds for tracking futures. Falling buyers – a once reliable feature in the cryptocurrency markets – have yet to reappear in any meaningful way, even after a 33% pullback. Meanwhile, after billions of dollars in leveraged positions were flushed out in last month’s flash crash, new investors have yet to fill the void.

“There was a lot of influence in the system in May and then before November,” said Jim Greco, managing director of Radkl, a crypto-trading firm. “There could be a lot of people who got blown away and they need to be replaced with new capital.”

Collapsed volume

Bitcoin’s trading activity has come to a halt as the enthusiasm wanes. After trending downward for months, trade volume only reached $ 4.8 billion on Tuesday, according to Kaiko data compiled by Messari. That’s down from $ 13.1 billion a year earlier and well below the year-over-year average of about $ 9.2 billion.

[Bloomberg]

The volume has not exceeded $ 10 billion since December 4, when the price of Bitcoin plunged more than 20% within minutes in a display of the coin’s notorious weekend volatility. About $ 2.4 billion of crypto exposure, both long and short, was sold off during the downturn, according to data from Coinglass.com.

“We’ve seen a number of US funds, accessories stores, and hedge funds pick up the risk essentially in the last hours of the year, but this year what we’ve seen is volumes are relatively down from the start of last month. Said Aya Kantorovich, Head of Institutional Coverage at FalconX. “I think what we see is always this question around, ‘Are we still at risk or at risk?

Sparkling futures

The futures market tells a similar story. After hitting an all-time high of $ 17.4 billion at the end of October, open interest on Bitcoin futures on the Chicago Mercantile Exchange is now around $ 10.6 billion, down 39%.

The anticipation of America’s first Bitcoin futures ETF, which debuted in mid-October as one of the most traded funds on record, fueled the surge. However, the excitement quickly faded – after attracting over $ 1 billion in just two days, Bitcoin ProShares Strategy ETF (BITO ticker) assets under management stand at $ 1.2 billion. .

“The fund’s launch correlates strongly with CME’s increased open interest, as assets under management grew rapidly in the first week after launch,” wrote Sam Doctor, chief strategy officer and head of research at BitOoda, in a note. Open interest “has recently fallen back to pre-launch levels of the ETF during the last week of December, although we would expect the OI to rise again as the holidays approach.”

Missing addresses

Amid the unrest, the growth of active addresses – an indicator of business activity – also stagnated. The tally currently stands at around 971,000, up from 1.2 million a year ago, according to CoinMetrics data compiled by Messari.

For Kantorovich, this could set the stage for a short, sharp cash crunch similar to the December flash crash.

[Bloomberg]

“The less active addresses you have could mean more assets stored in cold storage. The less tradable Bitcoin is, the more volatility you can expect on the exchanges as order book liquidity declines, ”Kantorovich said. “I think you could see a very quick, very short flash crash that deleverages open interest in the market very quickly, similar to what we saw in December.”

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