Bitcoin’s Trading Environment Analysis
Bitcoin’s recent constraint within a narrow trading range might not be as much about the movements of spot Bitcoin ETFs as many have suggested. Instead, it seems that the derivatives market is doing much of the heavy lifting, despite a noted decline in futures trading activity.
This viewpoint comes from CryptoQuant analyst Darkfost, who mentioned that Bitcoin futures volume has decreased significantly—nearly by half—since November 22nd, dropping from $123 billion to $63 billion in daily activity.
Futures dominate, not ETFs.
Darkfost pointed out that this decline partially accounts for the low volatility seen in Bitcoin over recent weeks. More importantly, when looking at relative scales, futures trading remains vastly more significant. Although futures trading now sits at $63 billion daily, it’s still “almost 20 times greater than Bitcoin ETFs ($3.4 billion) and around 10 times the spot market volume ($6 billion).” This highlights the influence of futures over ETFs.
Even if there are real outflows from ETFs that people are noticing, they might not be the main factor shaping the market. Darkfost noted that many observers remain focused on the ETFs, which have indeed seen noticeable outflows lately. Yet, he insists that the futures market continues to dominate in terms of overall trading volume.
To further clarify why Bitcoin’s price hasn’t been able to trend upward, Darkfost referenced net taker volume, a derivatives indicator that helps gauge whether aggressive buying or selling is taking the lead. He observed that whenever net taker volume dips into negative numbers, Bitcoin typically enters a correction phase, with short selling becoming prominent. It appears that this downward trend has been persistent for months.
Since July, net taker volume has “largely remained negative,” although there was a brief interruption in early October that let Bitcoin reach new all-time highs. However, selling pressure soon resumed, leading Bitcoin to stay within a confined trading range for about a month.
Still, there may be some initial signs of improvement in the data. Darkfost indicated that the selling pressure tied to futures has lessened since early November, with net taker volume shifting from approximately -$489 million to -$93 million. While he views this as a “positive signal,” he cautioned that it’s not yet sufficient to trigger a substantial change, emphasizing that “liquidity remains weak.” Both ETF and spot trading volumes, he noted, are still too limited for Bitcoin to break free from its current consolidation phase.
Demand matters.
Adding to the discussion, Julio Moreno, head of research at CryptoQuant, emphasized a broader outlook that shifts the focus away from chart-based cycles to demand dynamics. He pointed out that most firms tend to emphasize price performance to define cycles, but what’s crucial is the demand itself. According to Moreno, “Bitcoin demand is shrinking on a monthly basis and is slowing significantly—almost heading into negative territory—on an annual basis.”
Alongside these futures-driven insights, selling pressure from long-term holders of Bitcoin has also been emerging as a significant factor behind Bitcoin’s lackluster performance compared to stocks and gold. Notably, data suggests that selling by these long-term holders seems to have paused recently, with around 10,700 BTC transitioning into long-term holdings.
CryptoVizArt, a Principal Analyst at Glassnode, remarked in a recent post that this shift is more about the tempo of selling rather than a complete halt. “Long-term holders have not stopped selling,” he stated, mentioning that they are still offloading about 7,300 BTC per day and generating less than $200 million in daily gains. The distinction lies in the rate of selling, which has cooled off after a period of heavy distribution rather than a return to pure accumulation.
While Darkfost didn’t dispute that long-term holders could still sell sustainably, he emphasized a different viewpoint. “Even though long-term holder sales will never cease, a different perspective emerges when supply changes are observed,” he noted. Currently, it appears that coins are being taken out of circulation, meaning the amount of BTC moving into long-term holding status matches what long-term holders are selling to shorter-term buyers.
As of the latest update, Bitcoin was trading at $87,972.
