The trading volume of bitcoin is at a record level. The 90-day average of trade in bitcoins and bitcoin futures contracts together is about 40 percent higher than at the end of 2017. And that says something, the end of 2017 was the peak of the cryptomarket. Bitcoin then reached a value of more than 16,000 euros, the absolute high point so far.
Trade volume higher than ever
The credits for these statistics go to Charles Edwards. He is a digital fund manager and deals with algorithm trading. On the bottom graph you see different data. The mint green bars represent the direct trade in bitcoin. The red bars show the trade in bitcoin futures. And the green line that follows right through it is the 90-day average of both volumes:
Massive volume in Bitcoin
Guess what?
Things are not as they may seem.
Shrinking Spot market volume has been more than compensated for.
Futures have swallowed the Spot market. BTC 90 day Volume was recently 40% more than the 2017/18 peak.
This has powerful implications. pic.twitter.com/LXRoF9NXoG
– Charles Edwards (@caprioleio) November 11, 2019
What does that mean for the rate?
Even more interesting is the conclusion that Edwards draws from this. Edwards believes that we are on the eve of a huge rise in the bitcoin rate. He sees the same pattern always coming back:
- The 90-day average of the trading volume reaches a pinnacle
- The price of bitcoin makes a correction
- Then the course explodes! He takes examples from 2012 (245%), 2013 (1,047%) and 2016 (447%) of the stable to support his argument.
Can we now expect a price explosion? The statistics speak to him in any case.
Huge Rallies followed.
It is not uncommon for strong volume growth to continue strong price rallies. pic.twitter.com/T9qifADRoM
– Charles Edwards (@caprioleio) November 11, 2019
What is the difference between the spot market and the futures market?
Many analysts are concerned that the trade in bitcoin is disappointing. That is also true if you only look at the spot market. The spot market only includes the direct trade in bitcoin. For example if you buy or sell bitcoin on BTC Direct or BLOX.
But the futures market is now larger than the spot market. You can clearly see that on the Edwards chart. The red bars are larger than the mint green bars.
Since the end of 2017 it is also possible to trade in bitcoin futures contracts. It is possible to speculate on the price of bitcoin through bitcoin futures contracts. Most bitcoin futures contracts are settled in dollars, and therefore have no direct influence on the bitcoin rate. But indirectly, that is possible in this way.
Since the launch of Bakkt, it is also possible to trade bitcoin futures with bitcoin. You can bet on a rise or fall, and this also has a direct influence on the price on the spot market. Bakkt started slowly, but is now also becoming increasingly popular.
Daily summary of Tuesday’s Bits Bitcoin Monthly Futures:
? Traded contracts: 1456 ($ 12,725,440)
Before Day before: 1622 (-10%)
? All time high: 1756 (11/8/2019)Follow @BakktBot for real-time updates | Tip sats https://t.co/TF6sNUwWpO pic.twitter.com/yc6EpRt7mu
– Bakkt Volume Bot (@BakktBot) November 13, 2019
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