Bitcoin's Trading Volume Lowest Since 2023...Eyes on Interest Rate Variables

▲ Bitcoin (BTC), US Dollar (USD)

Bitcoin (BTC) trading volume has plunged to its lowest level since 2023. This has led to warnings that a surprise interest rate hike by the U.S. Federal Reserve (Fed) could shake the market.

According to crypto-specialized media Benzinga on July 29 (local time), Vetle Lunde, Head of Research at K33 Research, stated that the average daily spot trading volume for Bitcoin in July was only $2.2 billion. The recent 7-day average trading volume was $2.1 billion, a 4% decrease from the previous week. Monthly trading volume is expected to hit its lowest level since November 2023.

A clear wait-and-see attitude was also observed in the derivatives market. CME Bitcoin open interest remained near 2023 lows, and funding rates moved within the 5-7% range for a week. Benzinga reported that investors are not showing strong conviction in either upward or downward movements.

The market has priced in approximately a one-third chance of the Fed raising the benchmark interest rate by 0.25 percentage points. Macro analyst Alex Krüger stated, “If interest rates are raised, the downtrend in gold and silver could continue strongly.” He explained that if the Fed does not provide guidance on future policy direction, investors might perceive it as the start of a new tightening cycle rather than just a one-time hike.

There was also a forecast that highly volatile assets, including AI-related stocks, could rebound if the Fed freezes interest rates. Krüger singled out memory semiconductor stocks as assets to watch in that scenario. Fed officials were split evenly on whether to raise interest rates within the year at the previous meeting, with Dallas Federal Reserve President Lorie Logan and Cleveland Federal Reserve President Beth Hammack supporting a rate hike.

The deceleration of the consumer price inflation rate in June to 3.5% year-on-year, down from 4.2% in May, weakened the justification for an immediate rate hike. Krishna Guha, Vice Chairman of Evercore ISI, assessed that the slowing inflation made it difficult for the Fed to justify an interest rate hike. Neil Dutta, Chief Economist at Renaissance Macro Research, supported the possibility of a surprise hike, saying, “It’s better to move a little now than a lot later.”

[Article Summary]

-The average daily spot trading volume for Bitcoin in July was $2.2 billion, expected to mark the lowest monthly level since November 2023.

-CME Bitcoin open interest and funding rates showed a market sentiment lacking strong conviction in either upward or downward movements.

-The market has priced in approximately a one-third chance of the Fed raising interest rates by 0.25 percentage points, with warnings that a surprise hike could lead to significant market impact.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*