Following a crash to $59,353 earlier this month on June 5, Bitcoin (BTC) has recovered some of its losses, trading slightly above $62,000 as of Tuesday. However, exchange-data shows that although spot demand for BTC remains strong, there’s more to the cryptocurrency’s price action.
Bitcoin volume data shows bearish outlook
According to latest exchange data obtained on Tuesday, the Binance BTC spot vs perp ratio (SPVR) – measured against its 90-day rolling baseline – is currently hovering around -1.67.
At face value, an SPVR reading of -1.67 denotes strong spot demand for BTC, however, the underlying volume data tells a very different story. For the uninitiated, the SPVR is a ratio which captures the relative balance between spot and derivatives activity.
As of Tuesday, the Binance spot volume sits around the $0.51 billion mark – the 1.7th percentile across 1,633 trading days. Such a reading isn’t quite consistent with aggressive spot accumulation.
In tandem, perpetual futures volume has also declined sharply, falling as much as 22 percent week-over-week in comparison to 12.7 percent in spot. As a result, the z-score compression is driven by faster compression in derivatives activity, instead of an increase in BTC acquisition.
This distinction is important, as a low SPVR z-score during rising spot volume means genuine demand for the underlying asset. In contrast, a low SPVR z-score during broad volume drawdown means a speculative retreat.
Since the leverage layer (derivatives) are pulling back more aggressively than spot, it is reducing near-term volatility, but not leading to BTC accumulation on its own.
In simple words, the current market dynamics for BTC signify low-activity consolidation with low speculative participation. While this brings down liquidation cascade risk, it lacks the spot flow that is required for a structurally driven breakout.
What will be worth observing is a divergence where BTC’s spot volume rises in absolute terms, while the SPVR z-score remains suppressed. In such a situation, one can confidently say that there is a genuine demand rotation for BTC taking place.
Is BTC ready for a resurgence?
After wiping out nearly $360 million in long positions on Friday, analysts are confident that a significant amount of leverage has been reset for BTC. On the same day, data showed that the Bitcoin network is showing growth in on-chain activity.
From an institutional perspective, demand remains firm for the premier cryptocurrency. On Friday, Franklin Templeton unveiled a unique dividend-based ETF strategy that could indirectly increase demand for BTC.
