Grayscale’s Bitcoin Selling May Not Be Behind the Downtrend
The CEO of CryptoQuant, a firm specializing in on-chain analytics, suggests that the recent selling of Bitcoin by Grayscale may not be the main cause of the current downtrend in the market.
Derivatives Market Driving Recent Price Action
In a recent post on Twitter, CryptoQuant’s CEO discusses how the derivatives market has been driving the price action in Bitcoin. The “spot vs derivatives trading volume ratio” indicator is used to support this claim.
This indicator measures the total amount of Bitcoin involved in trading activity on exchanges. When the value of this metric is high, it indicates a high level of trading activity on the platform.
Dominance of Derivative Platforms
The spot vs derivatives trading volume ratio compares the trading volumes on spot and derivative platforms. A ratio higher than one suggests that derivative platforms are dominating the market.
A chart provided by CryptoQuant shows that derivative platforms have been dominant in the Bitcoin market for some time now. The recent low value of the ratio indicates a high interest in derivative products, potentially influencing price discovery more than spot trading.
Bitcoin Price and Grayscale’s Selling Pressure
Since the approval of Bitcoin spot ETFs, the price of Bitcoin has been struggling and experiencing a significant drawdown. Some attribute this to selling pressure from Grayscale Bitcoin Trust (GBTC).
However, according to CryptoQuant’s CEO, Bitcoin is currently driven by the futures market and is less affected by spot selling from GBTC. This suggests that other factors are playing a larger role in the recent price movement.
BTC Price Rebound
Bitcoin recently slipped below $39,000 but has since rebounded and is now trading around $40,000.
Hot Take: Bitcoin’s Downtrend Driven by Derivatives Market, Not Grayscale Selling
The recent downtrend in the Bitcoin market may not be solely due to Grayscale’s selling. According to CryptoQuant’s CEO, the derivatives market has been the primary driver of price action in Bitcoin. The dominance of derivative platforms over spot exchanges indicates a high interest in derivative products, potentially influencing price discovery more than spot trading. While Grayscale’s selling pressure from GBTC may have an impact, it is suggested that Bitcoin is currently driven by the futures market. The recent rebound in Bitcoin’s price further supports the idea that other factors are at play.
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