Bitcoin’s recent struggle to break free from a narrow trading range seems less influenced by spot Bitcoin ETF flows and more tied to the ongoing dynamics within the derivatives market, even as futures activity declines. This perspective is supported by CryptoQuant analyst Darkfost (@Darkfost_Coc), who noted that Bitcoin futures volumes have halved since November 22, dropping from $123 billion in daily trading to $63 billion.
Futures Markets Over ETFs
Darkfost explains that this reduction in futures volume contributes to the low volatility observed in Bitcoin recently. Notably, at $63 billion per day, futures volumes are still substantially larger than spot Bitcoin ETFs, which stand at $3.4 billion, and spot market volumes at $6 billion. Therefore, even if ETF outflows are evident, they may not be the main driving force affecting the market.
Many are pointing to the significant recent outflows from ETFs as a reason for Bitcoin’s price stagnation, but Darkfost argues that futures markets remain the leading factor in overall trading activity. He highlights net taker volume, a key derivative metric, as an indicator of aggressive buying or selling that further clarifies why Bitcoin’s price has struggled to gain momentum.
Ongoing Selling Pressure
Darkfost stresses that since July, net taker volume has mostly been negative, reflecting a prevailing bias towards selling. Although there was a temporary pause in early October that allowed Bitcoin to reach a new all-time high, selling pressure soon returned, confining Bitcoin within a limited range. Recently, there has been a slight improvement in futures-driven selling pressure, with net taker volume rising from around -$489 million to -$93 million, which Darkfost views as a positive sign, albeit insufficient to trigger any significant market shift.
In a related perspective, Julio Moreno, Head of Research at CryptoQuant, emphasizes the importance of demand dynamics over price performance. He points out that Bitcoin’s demand is decreasing on both monthly and annual bases. This contraction in demand, coupled with persistent selling pressure from long-term holders, has hindered Bitcoin’s comparative performance against traditional markets like stocks and gold.
Long-term Holder Dynamics
While recent reports suggest that long-term holders have ceased selling, other analysts, like CryptoVizArt from Glassnode, argue that long-term holders are still active sellers but at a reduced rate, thus temporarily calming the market. Darkfost offers a slightly different observation, noting that the distribution from long-term holders may have plateaued, making the amount of Bitcoin transitioning into long-term holding equal to the amount being sold.
As of now, Bitcoin is trading at $87,972, caught between key Fibonacci levels on the weekly chart. The market awaits further signs of demand recovery to determine if it can finally surpass the current consolidation phase.
