Bitcoin’s spot trading volume has dropped to levels not seen since 2019 amid a notable shift by institutional investors towards US Treasury bonds. This trend raises fresh worries about liquidity in the crypto market as safer assets allure fund managers cautious of recent futures signals.
Institutions Flee Bitcoin for Bonds
Data shows that since February, the three-month Bitcoin futures basis yield has remained below the yield on the US two-year Treasury note. This inversion of yields, only the second recorded occurrence, signals a tilt away from crypto investments toward traditional government debt. Many institutions interpret this as a sign of preferred safety and cash-like liquidity, creating pressure on Bitcoin spot volumes.
Bitcoin currently trades just above $63,000, facing resistance near $69,000, yet the market remains cautious. The ongoing bear market, while relatively shallow with a 49% decline, lacks confirmation of a solid bottom, which keeps institutional and retail investors on edge.
The Lingering Bear Market and Market Sentiment
Though the drawdown is less severe than previous cycles, this bear market has not lasted long enough to confirm a turn. Historically, bear markets endure about one-third longer before hitting their lowest points. This incomplete cycle combined with sentiment stuck deep in fear territory increases the cautious stance among traders, contributing to thinner trading activity.
This content is for informational purposes and does not constitute financial advice.
