For the first time since November 9, 2024, Bitcoin prices closed below the $80,000 support level for three consecutive days. Against the backdrop of increasing global macroeconomic uncertainty and rising market volatility, this panic drop has exacerbated investors’ cautious sentiment.
In the past week, Bitcoin prices fell 5.6%, but Bitcoin futures trading volume surged 64% during the same period. Generally speaking, rising futures trading volume indicates a rebound in speculative interest or that traders are adopting hedging strategies. It also shows that market tensions are rising rapidly, and investors are accelerating trading operations in the face of volatile events. It is worth noting that Bitcoin open interest (OI) has fallen 19% in the past two weeks.
The increase in trading volume and the decline in open interest indicate that most traders have chosen to close their positions rather than continue to hold them. This trend could be due to profit-taking or risk aversion amid short-term bearish sentiment. Between April 6 and 8 alone, total liquidations in the cryptocurrency market reached $2 billion, a massive amount of liquidations that highlights the extent of leverage in the market and reflects that more and more investors are adopting more cautious trading strategies.
Overall, these dynamics suggest that the market is in transition. The surge in futures trading volume may indicate that funds are starting to accumulate again after a correction. But the simultaneous decline in open interest suggests that market confidence remains fragile. If Bitcoin prices continue to fall and futures-related indicators fail to rise in tandem, this could indicate that the current bull cycle is coming to an end and a bear cycle may begin. Conversely, if prices, trading volumes and open interest rise simultaneously, it could mean that a new uptrend is starting.
Interestingly, institutional investor sentiment seems to be more stable. Although major US stock indices such as the S&P 500 have fallen more than 20% from their highs, Bitcoin spot ETFs have seen outflows of less than $300 million in the past two weeks. This suggests that large investors may still view Bitcoin as a long-term hedge or safe-haven asset.
