Bitcoin: BTC demand check as price remains stuck around $43,000

Bitcoin’s dominance grew as market depth increased.
Traders remained bullish on BTC, evidenced by the declining put-to-call ratio.

Bitcoin [BTC] has been fluctuating between $40,000 and $43,000 for some time now, leading to massive speculation about the future of the king’s coin. Despite the volatile price changes, BTC was still able to maintain its dominance in the market.

A little more depth

Based on Kaiko’s data, there was a marginal 2% increase in BTC’s market depth since late December.

For context, market depth refers to the volume of buy and sell orders for Bitcoin within a range of 2% of the current market price. It provides insight into the levels of supply and demand at different price points.

Although market depth increased, it had yet to reach pre-FTX levels. This suggested that despite the upswing, there may still be some caution or hesitation among market participants to fully engage with BTC at its former intensity.

A sharp increase in market depth for Bitcoin could be positive, indicating greater liquidity and a more attractive environment for investors. This liquidity facilitates smoother trading and attracts a wider range of participants, potentially instilling confidence in the market.

However, if the increase is caused by speculation or market manipulation, it can lead to higher and sudden price fluctuations.

#BTCThe market depth of 2% has risen slightly since late December.

However, the price is still not at pre-FTX levels, indicating that the market makers have not yet fully returned. pic.twitter.com/YGBEHs5uej

— Kaiko (@KaikoData) January 30, 2024

How are traders doing?

Traders were relatively optimistic about Bitcoin’s future. This was indicated by the put-to-call ratio for Bitcoin, which dropped significantly in recent weeks.

This fell from 0.52 to 0.46. One of the reasons for this could be the decreased implied volatility for Bitcoin.

Declining implied volatility could influence traders’ behavior by signaling reduced uncertainty and risk in the market.

Traders may interpret a lower IV as an indication that the cryptocurrency is likely to experience less dramatic price swings in the short term.

This could influence their decision-making on strategies that respond to more predictable market conditions, such as directional trading or the use of less risky options strategies.