Bitcoin Spot Volume Crosses $300 Billion for October as Long-term Holders Lead Sell-offs

Bitcoin spot volume has reached its highest level since January in a resurgence of spot interest. According to CryptoQuant analyst Darkfost, major exchanges recorded more than $300 billion in BTC spot volume.

Binance alone accounts for $174 billion in volume, while Gate.io had almost $48 billion, and Bybit pulled $36.27 billion.

Darkfost wrote:

Surge in Spot Volume is Likely Due to Liquidation; Positive for Bitcoin

The resurgence in spot Bitcoin volume comes amidst a decline in BTC open interest. This is a signal that retail and institutional investors are back on the spot side.

The CryptoQuant analyst noted that this could be due to the massive liquidation event of October 10. That led to the liquidation of over $19 billion worth of leveraged positions. It remains the biggest liquidation event ever in the crypto market.

According to Darkfost, this liquidation likely cautioned investors about the risk of leverage, forcing a shift to the spot market.

He wrote:

However, the analyst considered this a positive development in general, noting that a market driven by spot trading rather than derivatives is healthier.

A leverage-driven market with multiple open interests is more susceptible to extreme volatility. Thus, spot markets are more resilient and show stronger organic demand.

Bitcoin Tanks as Long-Term Holders Dump

Meanwhile, the massive spot volume of Bitcoin for the month is also partly due to the massive sell-off of BTC by long-term holders (LTH). Glassnode analysts highlighted this, noting that demand has decreased with a lack of conviction becoming more evident.

According to the analysts, LTH’s sales have increased in recent months, keeping the BTC price capped at $126,000. The 7-day moving average for BTC spent volume in profit by age went from $1 billion per day in mid-July to around $2 billion – $3 billion by early October.

They wrote:

Interestingly, holders with accounts of 6 months to 12 months account for more than 50% of recent sell pressure. These are the investors who purchased BTC heavily during the US elections in October, with an average cost of around $93,000. Thus, BTC would have to drop below $100,000 for this group to fill maximum pain.

Signs of fading demand are also evident with the exchange-traded funds. Bitcoin ETFs have had a 7-day average net flow of -281 BTC, the lowest since April. It indicated that spot ETFs are experiencing selling pressure.

So far, Bitcoin price has traded between $115,000 and $108,000 over the past seven days, with volatility relatively subdued. However, it fell by almost 3% in the last 24 hours despite the Fed cutting the interest rate.

This is a reaction to the warning by Fed Chair Jerome Powell that a December rate cut is not yet certain.