Despite the encouraging price movements, trading volumes remain subdued. Daily trading volumes on centralized exchanges, measured over a 7-day period, continue to show limited activity, with the total trading volume in the past week around $10.5 billion, similar to the figures recorded seven days earlier. On a monthly basis, trading volumes on centralized exchanges amounted to approximately $312 billion in September, reflecting a 26% decline compared to the $423 billion observed in August.
Low volumes usually coincide with reduced market volatility. This correlation is supported by BTC’s 30-day volatility, which has decreased to around 23%. This is the third-lowest level recorded since the metric’s inception in 2017.
Turning to the topic of Exchange-Traded Funds (ETFs), the US Securities and Exchange Commission (SEC) recently announced the postponement of decisions regarding the approval or rejection of certain Bitcoin spot ETFs, including those from 21Shares, Blackrock, Valkyrie, and BitWise. This announcement came a few weeks ahead of the original deadline. The SEC is expected to postpone all remaining filings scheduled for October, with the next deadline set for mid-January. Subsequently, the final deadline for most filings is in mid-March.
Meanwhile, the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) continue to maintain stable discounts, at around 20% and 28%, respectively. These discounts have shown minimal fluctuations over the past four weeks, in contrast to the significant narrowing observed throughout Q3. These discounts reflect a neutral sentiment regarding investors’ expectations for the eventual conversion of these trusts into ETFs, with investors waiting for the SEC’s final decision.
Despite experiencing low levels of both volatility and trading volume for several months, the next two quarters have the potential to become catalysts for the digital asset market, reigniting interest and trading activity. These crucial moments are in close proximity, with the final deadline for most Bitcoin Spot ETF approvals or rejections set for mid-March, followed closely by the scheduled Bitcoin halving in mid-April 2024.
The Bitcoin halving event involves a reduction in miners’ rewards for mining Bitcoin and has traditionally preceded an uptrend in the months leading up to and following the event. Given the combination of factors, including the SEC’s impending decision on ETFs, the focus and anticipation have shifted significantly to the first and second quarters of 2024.