Is Bitcoin Market “Overcold”?

According to the co-founder of CryptoQuant, a cryptocurrency analytics firm, Ki Young Ju, spot trading volume against derivative ones is now at a record high in two years. This hints at the market being actually overcold.

Bitcoin futures are being traded largely by whales now, suggesting the largest cryptocurrency is in the middle of another accumulation cycle. The recent price crash was followed by retail investors abandoning the futures market.

As Ju noted, when the crypto market overheats, people are likely to trade futures with higher leverage.

Bitcoin-denominated futures open interest reached a new peak last month while volatility remained low. In fact, the world’s largest cryptocurrency is now less volatile than the S&P 500 stock market index for the first time since 2020. This bearish cycle stands out because the trading volumes continue to remain consistently high.

The cryptocurrency market was expected to see “explosive” volatility owing to growing future open interest. Finally, after two consecutive red monthly candles, Bitcoin finished the previous month in the green.