• The recent wave of capitulation has led to a period of low bitcoin volume and volatility.
• Market depth and liquidity has declined due to the collapse of FTX and Alameda.
• Despite low activity, bitcoin price is still in a state of waiting for a clear change in trends.
The recent wave of capitulation in the Bitcoin market has led to a period of low volume and volatility. After the peak months of September and November 2021, volume in both the spot and perpetual futures markets has been steadily declining. This could be indicative of another leg lower to come in the market, but more likely it is reflecting the complacent and decimated market that few participants want to touch. The bitcoin price has yet to see the type of explosion in market volatility that has defined major directional moves in the past, leading to a state of waiting for a clear change in trends.
Unfortunately, the market depth and liquidity has also taken a major hit due to the collapse of FTX and Alameda. The loss of these two platforms has resulted in a large liquidity gap that has yet to be filled. This has made it more difficult for participants to find the best prices and has further contributed to the low volume and volatility environment.
It is uncertain what the future holds for the Bitcoin market, but it is clear that the current low activity is not sustainable. It is likely that once a clear change in trend is seen, the market will experience an increase in volume and volatility. Until then, participants will have to wait and see what the future holds.