Despite growing expectations for a US interest rate cut, Bitcoin has failed to achieve any meaningful price increase. Instead, there was a noticeable decrease in futures trading volume on Binance Futures, which analysts regard as a potential “red flag.”
In a report published on Monday, CryptoQuant analyst Mignolet argued that a significant drop in futures volume is a concerning sign.
A Change in Market Behavior
He explained that throughout the current bull run, bullish divergence in the market buy/sell ratio on Binance’s futures market has often indicated that the price was bottoming out or consolidating.
A high number of market buys on the futures market signifies that many investors and a lot of capital are betting on a price increase. He pointed out that historical trends in the Binance futures market typically point toward an upward trajectory.
However, the mood has shifted recently. Mignolet believes the current situation is similar to when the market peaked in 2021. He suggests that since the price has risen significantly, traders should look beyond simple bullish/bearish ratios and focus on actual trading volume.
Binance Futures Volume Needs to Recover
When analyzing the charts, Bitcoin’s price increases since 2020 have largely coincided with a rise in Binance futures buy volume. But this time, the situation is different. Although Bitcoin’s price sets new all-time highs, futures buy volume is not keeping pace. Mignolet noted that this divergence strongly resembles the market top of 2021.
He argued that while ETFs and MicroStrategy (MSTR) drive spot market liquidity, the futures market is still centered on Binance. According to Mignolet, a strong upward move for Bitcoin will be difficult without a rebound in the futures market.
Mignolet stopped short of declaring the end of the current bull run. “The problem is that liquidity is decreasing overall,” he said, adding, “If trading volume recovers, the market can be seen as not being over yet.”
Bitrue