Futures volumes on Binance are rising, while spot volumes have dropped significantly in recent days, even as BTC entered price discovery.
Volume analysis provides key insights into market dynamics. It not only helps reassess demand but also characterizes its nature.
Demand originating from derivatives markets versus spot markets offers very different signals about investor behavior and the potential market impact.
Today, we can observe that futures activity on Binance has increased slightly since May 5, while spot market volumes have clearly declined.
Whereas spot market buying suggests that investors are positioning themselves with a longer-term perspective, futures trades are mostly short-term bets that can introduce additional volatility, especially when they're not backed by strong spot demand to support the trend.
This increase in risk-taking on the market makes the trend more fragile and calls for heightened caution before making investment decisions.
Written by Darkfost
