A new report by CryptoQuant, a cryptocurrency analytics platform, suggests that Bitcoin may be entering a new phase of low volatility and high demand as investors are reluctant to sell their coins and prefer to hold on to them for the long term.
The report released today analyzes changes in the structure of Bitcoin's trading volume since January of this year.
Revealing that the ratio of spot volume to derivatives volume has decreased significantly from 35% to 6%, the report shows that only a small portion of the total Bitcoin trading volume occurs in the spot market, where investors buy and sell real coins.
According to CryptoQuant, this means that “investors don't want to sell their Bitcoins” and instead view them as digital gold, a valuable asset that can be hedged against inflation and uncertainty.
This is supported by the Binary CDD chart, which shows that there has been no active selling among long-term holders (LTHs) of Bitcoin since the beginning of the year, according to analysts.
The report also states that the total weekly trading volume of Bitcoin across all exchanges has decreased by more than 75% since March, from 2.5 million BTC to less than 600 thousand BTC. According to CryptoQuant, this indicates that the market has become less active and more stable as traders are less interested in speculating on short-term price movements.
However, CryptoQuant warns that this trend could have significant implications for the Bitcoin market and the cryptocurrency market in general. A drop in spot volume can lead to reduced liquidity, making it difficult to trade coins at an affordable price.
Analysts also claimed that it could increase the demand for and price of Bitcoin as investors perceive Bitcoin as a scarce and desirable asset.
*Not investment advice.