Analysis: Bitcoin spot trading volume hits lowest since October 2023, low liquidity may amplify market volatility

Data shows that the daily spot trading volume of Bitcoin has fallen to less than $8 billion, the lowest level since October 2023, when the BTC price was still below $40,000. Glassnode pointed 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 a reduction in market depth, making it more sensitive to capital flow changes.

Market depth is usually measured by the buy and sell orders within a 2% range above and below the current price. When depth contracts, a few large orders can significantly drive price swings, meaning market volatility could be amplified. However, the options market has not fully priced in this risk. The Volmex BVIV index shows that Bitcoin's 30-day implied volatility has fallen below an annualized rate of 42%, a three-month low, indicating that traders are still broadly betting on market stability.

Analysts believe that with the Federal Reserve's interest rate decision looming, market sentiment is cautious. 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 for a rate hike, thereby weighing on risk assets. (CoinDesk)