Grayscale recently won its lawsuit against the SEC, scripting yet another historic victory for the crypto industry. On the back of this development, the price of Bitcoin initiated a hype pump and rose to $28,143. The rally was accompanied by a multi-month high in the asset’s futures open interest.
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A spike in open interest usually means more traders are entering the market. Historically, such moves tend to strengthen ongoing trends. However, the rise in speculative interest could prove detrimental if it is not accompanied by a parallel rise in spot volume. So, in this article, we will analyze if the current uptrend in Bitcoin is sustainable or not.
Was BTC’s Rally a Spot-Driven Move?
A recent analysis by pseudonymous on-chain analyst MAC.D on CryptoQuant pointed out that the spot vs. derivative trading volume ratio decreased yesterday rather than increased. Additionally, he pointed out that the volume chart separately showed that the trading volume has been decreasing steadily when compared to the rebounds registered in January, March, and June 2023. In fact, it was ”the lowest yesterday,’ he pointed out. As far as specific numbers are concerned, the spot exchange trading volume stood at $74,699 yesterday, while the derivatives exchange trading volume was at $1,416,108. Market observers have been expressing their dejection. A particular user posted on X [formerly Twitter] recently,
“I was hoping for more of a spot driven move.”
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The market is currently in the midst of a macro liquidity crunch. MAC.D pointed out that in such situations, there is a tendency for prices to change significantly, even with small trading volumes. Hype rally phases are usually accompanied by investor FOMO. The analyst warned investors against accumulating without a plan.
For the bullish momentum to continue, spot volume will have to increase over the next few trading sessions. Alongside this, it is also pivotal for the BTC to close above the $27,200 support on the monthly chart for the bullishness to renew. If these conditions are not met, BTC will likely initiate a correction sooner or later.
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