In a recent analysis by K33 Research, Binance, a major cryptocurrency exchange, was identified as the key contributor to a 48% decrease in trading volume this September. The findings attribute this significant drop to a 57% reduction in the seven-day average Bitcoin spot volume on Binance since the start of the month. Further, there was an additional 8% decline in Bitcoin spot volumes over the past week from last week's 35-month low, primarily driven by decreased activity on Binance.
The ongoing legal issues Binance is facing with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) may be discouraging market makers from trading on the platform, casting a shadow over the entire market. Meanwhile, Coinbase (NASDAQ: COIN ), another crypto exchange dealing with a lawsuit from the SEC, experienced a 9% increase in Bitcoin spot trading volume this month.
Despite this downturn in trading volume, Bitcoin is leading a spot-driven rally among major cryptocurrencies. Over the past week, Bitcoin's price rose by 8%, hitting a three-week high. Ether and BNB also saw growth during this period, each increasing by 6%. Additionally, Toncoin entered the top ten cryptocurrencies by market cap following a 45% surge over seven days.
Analysts Vetle Lunde and Anders Helseth at K33 Research also noted changing sentiments among institutional traders. Derivatives traders on CME are adopting a more bullish outlook, contrasting with the bearish sentiment that prevailed since mid-August. There was a 19% increase in Bitcoin open interest among active market participants over the past week.
However, not all derivatives markets share this optimism. Ether's open interest on CME fell by 17% over the past week, indicating that traders are less attracted to the potential impact of an Ether ETF approval.
In a departure from previous trends, Lunde and Helseth argued that the direction of the crypto market in 2023 has been largely dictated by cryptocurrency-specific events. Factors such as short squeezes, ETF news, and sell-side pressures from bankruptcy estates and the U.S. government have become dominant market influencers. This shift is evident in Bitcoin's decreased correlation with traditional indices like the S&P 500 and the DXY since the start of the year.
Lunde and Helseth suggest that any impact on the crypto markets from the U.S. Fed's upcoming interest rate decision, expected to be announced today, will likely be short-lived due to this diminished correlation with traditional markets.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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