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In a recent analysis by K33 Research, Binance, a major cryptocurrency exchange, was identified as the main contributor to a 48% decline in trading volume in September. The findings attribute this significant drop to a 57% reduction in seven-day average spot volume on Binance since the beginning of the month. Additionally, there was a further 8% decline in Bitcoin spot volumes over the past week from last week's 35-month low, primarily driven by lower activity on Binance.
The current legal issues facing Binance with the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) may be deterring market makers from trading on the platform, casting a shadow over the entire market. Meanwhile, Coinbase (NASDAQ:), another crypto exchange facing an SEC lawsuit, saw a 9% increase in Bitcoin spot trading volume this month.
Despite this drop in trading volume, Bitcoin is leading a spot-driven rally among major cryptocurrencies. Over the past week, the price of Bitcoin rose 8%, hitting a three-week high. Ether and BNB also saw growth during this period, each up 6%. Furthermore, Toncoin entered the top ten cryptocurrencies by market capitalization after a 45% increase in seven days.
Analysts Vetle Lunde and Anders Helseth of K33 Research also noted changes in sentiment among institutional traders. Derivatives traders on CME are taking a more bullish outlook, in contrast to the bearish sentiment that has prevailed since mid-August. There was a 19% increase in Bitcoin open interest among active market participants over the past week.
However, not all derivatives markets share this optimism. Ether open interest on CME fell 17% over the past week, indicating that traders are less attracted to the potential impact of the approval of an Ether ETF.
Unlike previous trends, Lunde and Helseth argued that the direction of the cryptocurrency market in 2023 has largely been dictated by cryptocurrency-specific events. Factors such as short squeezes, ETF news, and selling pressures from bankrupt entities and the US government have become dominant influencing factors in the market. This change is evident in Bitcoin's decreasing correlation with traditional indices such as the and DXY since the beginning of the year.
Lunde and Helseth suggest that any impact on crypto markets from the US Federal Reserve's upcoming interest rate decision, expected to be announced today, will likely be short-lived due to this lower correlation with traditional markets. .
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