Futures contracts and bitcoin (BTC) options, which far exceeded the volume of the spot or immediate market, have declined markedly in recent weeks, Willy Woo noted in his latest market bulletin. Meanwhile, the price boost is due to intensive purchases by investors.
From the widely speculative market at the beginning of the year, in which high levels of leverage were used , it has moved to a market where spot volume dominates, says the analyst. From a strongly bullish phase of bitcoin that manifested after January, speculative markets have become skeptical, Woo notes.
Funding rates for long positions are neutral at the moment, says the specialist. , which is a long way from the first quarter, when the demand for long positions was huge. The number of bitcoin contracts currently in force is at low values, highlights the analyst, as can be seen in the following graph.
Strongest price validation that may have the market
The reduction of the leverage levels and the volume of futures have as As a result, the price of BTC is driven by a strong activity of spot purchases, on the part of long-term investors, says Willy Woo.
This environment in which the spot dominates, produces a moderate increase in volatility, with much less volume traded than usual. Although many traders consider that low volume would invalidate the price movement, in reality investor buying is the strongest price validation the market can have.
Willy Woo, Bitcoin Market Analyst.
In relation to the reduction in Leverage for futures trading, in the last weeks of July the exchanges Binance and FTX limited the leverage levels for futures trading to 20x, as reported by CryptoNews. This reduction was apparently due to pressure from regulators in different parts of the world, specifically on the futures market.
There were also declines in BTC traded volumes in the exchanges, as well as lower volume in futures and options in the last week of July, despite the rebound in price from the low of USD 29,000, as reported in this medium.
