Reduced trading volume on Binance futures may indicate potential concerns for the Bitcoin market.
In a report published on Monday, CryptoQuant analyst Mignolet has raised concerns about a decrease in the trading volume of futures contracts on the Binance platform. This could be a cause for concern, according to Mignolet, as a strong Bitcoin rally might find it difficult to materialize without a rebound in volume on the Binance futures market.
Mignolet suggests that traders should focus more on the volume of actual trading rather than simply on bullish/bearish ratios. He considers the decrease in futures contract volume a potential "warning sign" for Bitcoin's future.
The current situation resembles that observed at the market peak in 2021. During the recent bullish trend, a positive divergence in the buy/sell ratio on the Binance futures market often indicated that the price was stabilizing or entering a consolidation phase. However, this time, the volume of futures contract purchases is not keeping pace with the price increase.
Since 2020, Bitcoin price increases have typically coincided with an increase in the volume of futures contract purchases on Binance. A high volume of purchases on the futures market reflects that many investors and a large amount of capital are betting on a price increase.
Mignolet did not declare the end of the current bullish trend, but he noted that overall liquidity is decreasing. He also pointed out that ETFs and MicroStrategy (MSTR) are boosting market liquidity in the spot market, but the futures market remains centered on Binance.
Interestingly, the entity with the strongest trading volume on the Binance Futures market is typically large institutional traders or Binance's own market-making bots. However, specific firm or individual names are not publicly disclosed. There has been a significant increase in Binance Futures trading volume correlating with recent historic Bitcoin price highs.
If trading volume picks up, the market might not have reached its peak yet, according to Mignolet. He did not elaborate on what could cause an increase in trading volume, but his report serves as a reminder for traders to keep a close eye on the volume of futures contracts on the Binance platform.
