Recent data has revealed an intriguing development in Bitcoin (BTC) trading patterns. The volume of Bitcoin derivatives trading has exceeded that of spot trading during BTC’s latest recovery rally, pushing its value beyond $100,000.
Bitcoin Trading Volume Ratio Has Declined Under The 1.0 Mark Recently
In a recent post on X, crypto analyst Axel Adler Jr. discussed trends pertaining to the Trading Volume Ratio for Bitcoin. This “Trading Volume Ratio” serves as a key indicator that tracks the ratio of Bitcoin trading volume on spot exchanges compared to that on derivatives exchanges.
A ratio above 1 indicates higher trading volumes on spot platforms than on derivatives, suggesting stronger retail involvement. Conversely, a ratio below 1 signifies a predominance of trading activities occurring in the derivatives market.
As illustrated in the chart shared by the analyst, the Bitcoin Trading Volume Ratio has recently hovered below the 1 mark, indicating that derivatives trading has heavily dominated the market. This trend has persisted throughout the latest phase of Bitcoin’s recovery rally, which has seen the cryptocurrency’s price breach the $100,000 threshold. The chart also reveals a stark contrast to the previous month’s rally, which saw a surge in the Trading Volume Ratio above the 1 level, highlighting that spot trading was likely the primary driving force behind that price increase.
Historically speaking, price rallies that emerge primarily from speculative activity within the derivatives market tend to be less stable, hinting at potential volatility ahead. With derivatives trading continuing to dominate the current rally, questions arise about its sustainability and the future trajectory of Bitcoin’s price.
Separately, insights from on-chain analytics firm CryptoQuant reveal that Ethereum (ETH) appears extremely undervalued compared to Bitcoin. In a post on X, the firm highlighted the Ethereum to Bitcoin Market Value to Realized Value (MVRV) Ratios, a significant metric assessing investors’ profit-loss dynamics.
This analysis shows Ethereum’s MVRV Ratio considerably lagging behind Bitcoin’s, suggesting historical patterns of outperformance may favor Ethereum. Nonetheless, the report cautions that weak demand, supply pressure, and stagnant activity could inhibit any potential rebound.
BTC Price
In a noteworthy development, Bitcoin has rallied nearly 3% over the last 24 hours, successfully breaking above the $101,000 mark.
