Though Bitcoin (BTC) often grabs attention with its significant moves in the market cycle, recent observations hint that some liquidity sources may be lurking beyond just Coinbase.
CryptoQuant analyst Mignolet has taken a closer look at the current Bitcoin market, uncovering how major exchanges like Coinbase and Binance have influenced the ongoing bull run.
Evolving Liquidity Dynamics and Exchange Influence
In a detailed post on the CryptoQuant QuickTake platform titled “Coinbase Dominance Remains Low,” Mignolet delved into how Coinbase’s impact on Bitcoin’s price has shifted.
Initially, Coinbase was pivotal in this year’s Bitcoin rally. However, its influence appears to be waning. What this points to is a spreading out of liquidity across more of the market, with Binance stepping up as a key contributor to the sustained bullish trend.
"Coinbase dominance remains low," Mignolet noted, "However, just before the rise in September-October, Coinbase dominance actually declined and has not significantly increased even now (red box)."
According to Mignolet, the dominance of Coinbase in spot trading took a noticeable dip during Bitcoin’s second rally phase. He dug into how the approval of Bitcoin exchange-traded funds (ETFs) earlier in the year led to an uptick in Coinbase’s trading volumes.
This liquidity boost played a crucial role in pushing Bitcoin prices up and challenging the classic expectations tied to the halving cycle. Yet, as the rally moved forward, Coinbase’s grip eased.
Mignolet underscores that while Coinbase is still a vital liquidity source, Binance has climbed the ranks in this current market phase:
"Let me reiterate: I’m not saying that Coinbase liquidity is unimportant or insignificant. It’s incredibly important. What I am highlighting is that there’s an even more critical source of liquidity at play — Binance."
The rising prominence of Binance suggests liquidity is streaming in from a wider mix of players, which might be bolstering a more decentralized and resilient market framework. This shift may hint at a growing interest from both institutional and retail investors, as they branch out with their trading platforms.
Bitcoin’s Swift Recovery
After a brief slump that pulled its value below $95,000, Bitcoin appears to have bounced back vigorously.
As of now, Bitcoin has climbed back over the $100,000 threshold, with the current trading price hitting $100,625, reflecting a 4% uptick.
This recent price boost has now positioned Bitcoin just a modest 3.6% shy of its all-time high, set above $103,000 earlier this month.
Featured image made with DALL-E, Chart from TradingView
