While Bitcoin (BTC) has previously shown significant volatility in this market cycle, recent insights suggest that sources of liquidity outside of Coinbase may be driving the trend.
CryptoQuant analyst Mignolet provided specific details analysis of the Bitcoin market, shedding light on the role of major exchanges such as Coinbase and Binance in the ongoing bull cycle.
Changing liquidity dynamics and exchange positions
In a recent post on the CryptoQuant platform QuickTake titled “Coinbase Dominance Remains Low,” Mignolet explored the trajectory of Coinbase's influence on Bitcoin's price movements.
The analyst pointed out that although Coinbase played a vital role in the introductory stages of Bitcoin's rally this year, its dominance has since declined. This move reflects a wider distribution of liquidity across the market, with Binance emerging as an important player in maintaining the bullish trend.
Coinbase's dominance is still low
“However, just before the September-October surge, Coinbase's dominance declined and has not increased significantly even now (red box). – With @mignoletkr
More details
https://t.co/nmnPGuz3WK pic.twitter.com/mBSImH8MwD
— CryptoQuant.com (@cryptoquant_com) December 11, 2024
Mignolet's analysis points to a critical point: Coinbase's dominance in spot trading has declined notably during the second grade Today, the exchange rate of Bitcoin has increased against Bitcoin.
His research revealed that a Bitcoin exchange-traded fund (ETF) was approved earlier this year, prompting an increase in Coinbase's trading activity.
This flow of liquidity was instrumental in driving Bitcoin prices up and disrupts what is expected of a semi-traditional circle. However, as the rally progressed, Coinbase's influence faded.
The analyst confirmed that although Coinbase is still the main source of liquidity, Binance has taken a more prominent place in the current market level. Mignolet wrote:
Let me repeat: I'm not saying that Coinbase's liquidity is unimportant or small. It is very important. What I am highlighting is that there is an even more critical source of liquidity at play. = Binance
In particular, Binance's increasing dominance indicates that liquidity flows from a wider range of participants, contributing to a relatively decentralized and robust market structure.
This redistribution could appear wider institutional interest and sales in Bitcoin as traders and investors diversify their platforms.
Bitcoin is seeing a sharp rebound
After a few days of correction falling below the $95,000 price mark, Bitcoin has now seen a sudden rebound.
In particular, at the time of writing, the asset has recovered the $100,000 price tag with today's trading price of $100,625, marking a 4% increase in its price.
This increase in the price of Bitcoin has now brought the fund to a mere 3.6% decrease away from the all-time high above $103,000 established earlier this month.
Featured image created by DALL-E, Chart from TradingView
