There has been a significant decrease in the volume ratio between bitcoin's daily trading activity in spot and derivatives markets as of lately, hinting to a reawakened speculation in the crypto market. The volume ratio dropped by 80% in the past three months, falling to its lowest mark since May 2022, according to data compiled by CryptoQuant. This shift is occurring during a surge in bitcoin's price by 70% over the last year, highlighting the rising risk appetite among crypto market participants and resulting in greater volatility in the prices.

The fast change in the volume ratio from March of this year could be indicative to speculative traders fueling the crypto rally. Silvergate and Signature Bank, two major fiat-to-crypto on-ramps, were taken over by regulators, placing doubt on the theory that the rise was simply a shift from USD belief to crypto as a result of credit risk. It appears that, instead, the same liquidity was only redistributed to high-leverage products.

By definition, the spot market is the trading of financial instruments for immediate delivery, while derivatives are a group of contracts which are connected to an underlying asset and are traded at a future date. It's widely assumed that spot activities are mostly concerned with long-term investors, with derivatives seemingly being more of a play-thing for experienced, stocked traders and speculators who attempt to make significant gains with the use of leverage.

Overall, the descent to an eleven month low in the spot-to-derivatives trading ratio, along with the takeover of the primary fiat gateways alluding to an increase in speculation of the crypto market. This suggests potential volatility within the cryptocurrency sector, as retail and speculative players experiment with a variety of trading activities.



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