Analysis: Bitcoin Spot Trading Volume Hits Lowest Since October 2023, Low Liquidity May Amplify Market Volatility

Odaily reports that data shows the daily spot trading volume of Bitcoin has fallen to below $8 billion, the lowest level since October 2023, when the BTC price was still below $40,000. Glassnode points out that since the peak of over $25 billion in early February this year, trading volume has continued to decline. A low-volume environment typically implies reduced market depth, making it more sensitive to capital flow changes.

Market depth is usually measured by the cumulative bids and asks within a 2% range of the current price. When depth contracts, a few large orders can significantly drive price movements, meaning market volatility may be amplified. However, the options market does not currently fully reflect this risk. The Volmex BVIV index shows that Bitcoin's 30-day implied volatility has fallen below 42% annualized, hitting a three-month low, indicating that traders are generally betting on continued market stability.

Analysis suggests that with market sentiment cautious ahead of the Federal Reserve's interest rate decision, Bitcoin is currently hovering around $77,800, lacking a clear direction. If the Fed signals a hawkish stance, particularly expressing concerns over rising energy prices and inflation risks, it could prolong the pause in rate cuts or even strengthen expectations of a rate hike, thereby suppressing risk asset performance. (CoinDesk)