Volume at LMAX Digital normalized on Tuesday, following exceptionally high volume to start the week. Total notional volume for Tuesday came in at $1.15 billion, down 7% from 30-day average volume.

Bitcoin volume came in at $683 million and while pulling back from Monday, actually held up well, holding up 2% above 30-day average volume. Ether volume dropped off on Tuesday to $329 million, 7% below 30-day average volume.

Looking at average position size over the past 30 days, we’re seeing average bitcoin position size jumping up to $14,044 and average position size for ether shooting up to $5,996.

Volatility has been slowly picking up since finding a bottom in July. We’re now looking at average daily ranges in bitcoin and ether of $2,778 and $202 respectively.

It’s clear the crypto market has been super enthused about the bitcoin ETF news in the United States. Bitcoin has rocketed back up towards a retest of the record high from earlier this year, with a lot of that momentum coming from the launch of these ETFs.

With all that said, we think it’s worth highlighting the potential for short-term headwinds. First off, as per our technical overview in today’s report, bitcoin has run a little far and fast and is now trading in overbought territory on the daily chart.

There is also the potential for a ‘sell the fact’ type reaction now that we have actually scene the launch of the bitcoin ETF product. After all, regulatory headwinds are still swirling around the space and that uncertainty could easily come creeping back in.

Finally, we also wonder just how much of this rally has been tied to the latest resurgence in global risk appetite. US equities are right back to record highs and there has been evidence to suggest bitcoin and crypto assets overall have benefited from this flow.

While we contend bitcoin should be very well supported in a risk off backdrop over the medium and longer-term, short-term, stocks are still looking vulnerable with inflation running high and threatening the global outlook.

This could open some risk off flow and weigh on crypto in the days ahead.