Despite the increased market credibility major market cap tokens have gained since 2021 and the eager ‘degen’ traders who jump on Bitcoin and Ethereum when ETF news emerges, the overall data tells a consistent story: there’s no influx of new capital into the market. This absence of new investment was a significant factor in the bull market of 2021, and it’s likely to play a role again in 2024–2025.
However, for the present, it’s important for investors and traders to bear these considerations in mind and understand why Bitcoin and Ethereum aren’t yielding substantial gains in 2023. Ethereum’s price today is US$1,703.80, with a 24-hour trading volume of $4.3 B. ETH is -1.99% in the last 24 hours. The live price of Bitcoin is $26,309.88 per (BTC / USD) with a current market cap of $ 512.50B USD. 24-hour trading volume is $ 11.92B USD.
As per data released by CCdata, cryptocurrency spot market trading activity hit its lowest point in more than four years last month, extending a period of subdued activity across digital asset trading platforms. This lack of activity persisted despite the market’s volatility following Grayscale Investments’ legal win against the U.S. Securities and Exchange Commission.
Despite initial excitement, the market lacked the confidence to sustain a bullish trend. Specifically, the volume of spot trading on centralized exchanges witnessed a significant 7.78% decline to $475 billion for the second consecutive month, marking its lowest level since March 2019. Spot trading volume quantifies the total number of tokens exchanged within a specified timeframe.
In the derivatives market, trading volume fell by more than 12%, reaching its second-lowest level since 2021. The proportion of derivatives in the overall market activity also declined for the third consecutive month, down to 77.3%. Furthermore, the dollar value locked in open derivatives contracts experienced a substantial drop of 19.5%, decreasing to $17.1 billion.
The PvP Market’s Influence on Bitcoin and Ethereum
In a PVP market, the source of market volatility stems from traders actively trading against one another on various assets. However, when there’s a dearth of fresh capital entering the market, any increase in market value observed in newer, lower-cap assets can be considered borrowed value. Many of the alternative cryptocurrencies that have surged in recent days have already experienced significant corrections, with declines of up to 50% in just a few days. The noticeable decrease in spot trading volumes coupled with a relative increase in derivatives trading is indicative of the market’s PVP nature.
For those closely monitoring the market, they may have observed small-cap cryptocurrencies experiencing rapid and dramatic increases in value. Notable examples include CYBER, RLB (Rollbit), SUI, and UNFI, among others. The question arises: why are these assets consistently reaching new yearly highs on a weekly basis, while Bitcoin and Ethereum remain in a consolidation phase? The answer lies in the current market structure, which can be described as a “PVP” or “player vs. player” market.
One fundamental strategy for earning profits in an investment market involves aligning your trades with prevailing trends. Presently, we find ourselves in a situation where there isn’t a clear, established, and directional trend. Bitcoin and Ethereum are oscillating within price ranges that encompass their highest and lowest points, while low-cap altcoins are essentially experiencing rapid price spikes followed by sharp declines. In this tumultuous period, the wisest approach would be to adopt a more cautious stance, taking the time to carefully assess promising projects with significant potential for the upcoming bullish market cycle.