Bitcoin's recent inability to break free from a narrow trading range is largely attributable to the derivatives market, specifically futures trading, rather than the widely discussed spot Bitcoin ETF flows. According to CryptoQuant analyst Darkoast, futures volumes, despite being cut in half since late November, still massively overshadow the influence of spot ETFs, dictating the cryptocurrency's current price inertia.
Futures Market Dominance
The analyst highlights a significant disparity in market influence: Bitcoin futures volumes, even after a substantial drop from $123 billion to $63 billion daily since November 22, continue to represent an overwhelming force. This $63 billion daily volume is nearly 20 times that of spot Bitcoin ETFs ($3.4 billion) and approximately 10 times the spot market volumes ($6 billion). This colossal difference indicates that while ETF movements grab headlines, futures markets are the primary drivers of Bitcoin's price action and observed low volatility.
The Role of Net Taker Volume and Liquidity
Further analysis using "net taker volume," a metric reflecting aggressive buying or selling in derivatives, reveals a persistent selling pressure. Since July, net taker volume has predominantly remained negative, signaling a market dominated by sellers. Although a brief period of slowdown in early October allowed Bitcoin to achieve a new all-time high, selling pressure quickly resumed. Currently, while futures-driven selling pressure has somewhat eased, improving from -$489 million to -$93 million since early November, this improvement is not yet sufficient to trigger a significant regime change. Overall market liquidity remains weak, trapping Bitcoin in its current consolidation phase. Adding to this perspective, Julio Moreno, CryptoQuant's Head of Research, points to contracting monthly demand for Bitcoin, with annual demand also significantly slowing. This demand-side weakness, combined with the derivatives' influence, paints a comprehensive picture. Separately, long-term holders (LTHs) have also contributed to recent selling pressure, causing Bitcoin to underperform traditional assets like gold and the stock market. However, this LTH selling appears to have subsided, with signs of coins transitioning back into long-term holdings, a potentially positive shift for future price stability.
