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Quant Explains How US Stock Market Volumes Influence Bitcoin Price


A quant has explained how there is a connection between the recent trends in the US stock market volumes and the Bitcoin price.

TradFi Depth Oscillator Has Hit A Low And Is Now Turning Back Up

As explained by an analyst in a CryptoQuant post, the volume depth in traditional finance markets has been low recently.

The “TradFi volume” is a measure of the total amount of transactions that buyers and sellers are making on the US stock market.

There is a concept called “market depth,” which is the ability of any market to take in large orders without impacting the price of the commodity much.

Generally, the more orders there are in a market, or simply, the higher its volume, the stronger the depth of the asset. However, something important is that these orders should be spread evenly within the market, otherwise the depth wouldn’t be as great.

Using an oscillator, the cyclical trend in the depth of any asset can be noticed. Here is a chart that shows how the US stock market volume depth oscillator has changed its values during the last few months:

The value of the metric seems to have been turning around in recent days | Source: CryptoQuant

As you can see in the above graph, the quant has marked the relevant zones of trend between the Bitcoin price and the TradFi volume depth oscillator.

It looks like whenever the indicator has transitioned from positive to negative values, the value of the crypto has observed bearish winds.

On the other hand, the metric crossing the zero line the opposite way has lead to a bullish trend for the price of BTC.

Bitcoin has also seen local bottom formations around the points where the stock market volume depth oscillator itself has hit lows.

About a week ago, the indicator hit very low values that were comparable to those between February and March 2020. Since then, the metric has started turning back up.

The analyst believes that this recent trend formation could imply that Bitcoin may see a respite soon, and bounce to levels between $21.5k to $24.5k.

Bitcoin Price

At the time of writing, Bitcoin’s price floats around $19.2k, up 2% in the last seven days. Over the past month, the crypto has lost 4% in value.

The below chart shows the trend in the price of the coin over the last five days.

Bitcoin Price Chart

Looks like the value of the crypto has been stuck in consolidation during the past few days | Source: BTCUSD on TradingView
Featured image from Traxer on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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