- The best performances of Bitcoin in history were when both spot and derivative volumes exploded as real demand was a key factor in ensuring sustained upward movement.
- In the year 2022, no matter whether the derivative markets are active or not, Bitcoin was gathering at an approximate of 20, 000, which confirms that it needs a constant purchase interest.
- Current trading shows derivatives dominate while spot remains subdued, and only consecutive increases in spot activity could trigger another powerful rally.
Bitcoin spot vs. derivative volume has become a crucial gauge for market direction. Analysts note that past rallies often coincided with surges in spot demand. Today, derivatives dominate, raising questions about the sustainability of upward price moves.
Spot Volume as a Driver of Bull Markets
CryptoQuant recently shared research by market analyst PelinayPA, who compared Bitcoin spot vs. derivative volume to identify rally triggers. The chart tracked Bitcoin prices alongside exchange spot and derivative trading activity.
SOURCE: cryptoquant
Derivatives were heavily used during the July-November 2021 bull run, but sharp increases in volume drove momentum on the spot. Bitcoin shot up and reached higher than $65,000 when it retracted along with these two categories of trading that were expanding at the same time, which is one of the best periods in its history.
The analysis explained that rallies were not driven by derivatives alone. Sustained increases in spot transactions reflected genuine investor demand, which proved essential for pushing the market higher. Without this base, derivative activity lacked the strength to support longer rallies.
Weak Spot Demand in Bearish Phases
In contrast, the 2022 spring downturn saw spot demand weaken while derivatives remained active. Bitcoin declined from around $40,000 to nearly $20,000 during this period. Analysts noted that derivatives dominated, but without real buying activity in spot markets, price stability was difficult to maintain.
The summer and fall of 2022 offered temporary bursts of spot activity. However, those increases lacked persistence, preventing Bitcoin from regaining upward momentum. Instead, the asset consolidated near the $20,000 level, unable to break higher despite active derivative speculation.
These observations reinforced the relationship between spot demand and sustainable growth. Derivative trading alone often adds volatility, but strong spot buying creates the foundation for longer rallies. Market observers point out that this trend has remained consistent throughout past cycles.
Current Market Outlook
The current situation shows derivatives continue to dominate while spot activity remains subdued. According to @PelinayPA, this imbalance suggests the market is still driven by speculative leveraged positions rather than long-term investor interest.
CryptoQuant emphasized in its post: “Historically, major rallies followed strong spot volume growth. Today, speculative leveraged trading drives the market more than genuine spot demand.” The commentary further noted that only consecutive surges in spot trading could confirm a strong bullish setup.
When the spot demand is too weak, there is a chance that Bitcoin will move around the area of $20,000 or even lower due to the pressure of derivatives. Without a material rebound in spot buying, analysts warn, any conditions of a sustainable rally will not be created.
