• Bitcoin’s volume and volatility have been declining since September and November of 2021.
• Market depth and liquidity has decreased due to the collapse of FTX and Alameda.
• The bitcoin price is providing a lot of pain as there has yet to be an explosion of volatility which usually signals a change in trends.
The recent wave of capitulation has left Bitcoin’s volume and volatility in a state of decline since the peak period of September and November 2021. Market depth and liquidity have taken a major hit after the collapse of FTX and Alameda, leading to a large liquidity drain. This could be indicative of another leg lower to come in the market, but it’s more likely indicative of a complacent and decimated market that few participants want to touch. Even during the November 2021 capitulation period, there was a historically low period of volatility.
The bitcoin price has provided a lot of pain for those waiting for a clear change in trends. Despite the many different ways to define, classify and estimate bitcoin volume in the market, they all show the same thing: September and November 2021 were the peak months of action. Since then, volume in both the spot and perpetual futures markets have been in steady decline.
In times like these, it is important to be aware of the current state of the market in order to prepare for the next leg lower or any potential directional moves indicated by an explosion in volatility. Although it is difficult to predict which direction the market will go in, it is important to stay informed and be ready for whatever comes next.