The price of Bitcoin (BTC) increased from $9,088 to $11,800 since July 1 by more than 30%. With it, volume on the major exchanges increased to a staggering $334 billion.
A CryptoCompare report published by the Bitcoin futures exchange BitMEX says
„In July, top tier volumes increased 42.1% to $334 billion while bottom tier volumes decreased 38.1% to $224 billion. Top tier exchanges now account for 60% of total spot volume.
The $334 billion figure does not take into account the so-called „lower tier“ exchanges, as described by researchers.
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The volume of top-tier exchanges continues to grow
The derivatives market continues to grow while the spot market remains stagnant
According to the data, the market for crypto-derivatives is growing at a faster rate than the spot market. In July, derivatives volume increased by 13.2%, while spot volume decreased. The report says:
„Derivatives volumes were up 13.2% in July to $445 billion. Meanwhile, total spot product volume declined by 0.5% to $639.1 billion. As a result, derivatives continued to gain market share and accounted for 41% of the market in July (up from 38% in June)“.
This trend demonstrates the growing demand for futures contracts and options on crypto-currencies, which are often sought after by professional and full-time traders.
The data could be analysed in two contrasting ways. It could mean that there is a general increase in demand for Bitcoin from traders, or that the market is reaching saturated territory. When the futures market becomes the main catalyst for the Bitcoin market, it can increase the chances of a large spike in volatility.
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Since futures contracts are leveraged and first-tier exchanges provide up to 100 times the leverage, the chances of a prolonged adjustment could increase if the spot market does not sufficiently complement the futures volume.
For now, the researchers explained that the volume of the spot market is increasing in parallel, although at a slower pace. The researchers noted:
„Spot volumes have recovered at the end of July in the midst of the current Ethereum Code bullish market run. After the July update of the CryptoCompare reference exchange classification, the data shows that the riskier exchanges generally decreased in volume as users started to switch to the less risky ones“.
It remains uncertain whether the spot market volume and general public awareness are high enough to drive the Bitcoin price breakout above a significant resistance level of $12,500.