October was a turbulent month for BTC, but it saw a surge in spot market activity. Top exchanges registered over $300B in BTC spot volume, with $174B on Binance.
October was the second most active month for BTC spot trading. The period was turbulent, stirred by whale selling and retail activity in attempts to realize a higher price. In October to date, centralized exchanges posted $300B in BTC spot volumes, of which $174B happened on Binance.
Spot liquidity is yet to revive fully, as most of the BTC trading switched to highly leveraged derivative markets. The current spot markets rely on a lower supply of BTC and stablecoins, and most of the dramatic price moves are still linked to the derivative market. Despite this, BTC showed a return to spot was possible, with some signs of spot-led rallies in the past weeks.
October set up expectations for significant gains, but only achieved this in the first half of the month. Briefly, net gains for October increased to 1.2%, but the month eventually dropped into the red with a loss of 2.69% to date.
BTC traded at $110,337 after a short dip to the $109,000 range, as the coin reacted to news of a potential end of the Fed monetary easing cycle.
Spot trading also allowed for BTC accumulation into self-custodial wallets. The increased spot activity also underscored the risk of derivative trading. Additionally, only spot markets still absorbed the recently awakened old wallets.
Based on recent analysis, a shift to spot markets may decrease the volatility of highly leveraged derivative positions.
Exchange reserves decline in October
As a whole, BTC held in exchange hot wallets decreased in October. In the past month, the reserves on all exchanges declined from 2.65M BTC to 2.38M.
In the short term, some inflows returned to Binance, but overall, more BTC was held as reserves. BTC spot trading has shifted to new whales, as most older holders sold at earlier market stages.
Exchange inflows show the occasional whale still makes large BTC deposits with the goal of achieving a better average price.
Spot exchanges saw a mix of selling and accumulation
In October, on-chain data showed disbursements from Binance’s hot wallets. At the same time, order history shows traders were still trying to buy spot BTC through TWAP orders. Additionally, trading data showed sellers were extremely active during breakout attempts for BTC, causing liquidations on derivative markets.
In the past month, the taker buy and sell ratio was mostly balanced. However, Bybit was mostly used for buying BTC. On Binance, sell-taker orders were more dominant in October, further evidence of the selling pressure on the spot exchange.
Occasionally, whales showed aggressive buy orders, potentially linked to institutions or other large-scale traders. Treasury buying continued at a much lower pace, as DAT companies acquired the least amount of BTC for the whole year.