Total notional volume at LMAX Digital was up in the previous week. Total notional volume from last Monday through Friday came in at $2.6 billion, 11% higher than the week earlier.

Breaking it down per coin, Bitcoin volume came in at $1.4 billion in the previous week, 4% lower than the week earlier. Ether volume however made up for the bitcoin setbacks, coming in at $753 million, 26% higher than the week earlier.

Total notional volume over the past 30 days comes in at $13 billion.

Looking at average position size over the past 30 days, we’re seeing average bitcoin position size at $7,612 and average position size for ether at $2,786.

Volatility has come back down after recently trading up to yearly high levels. We’re looking at average daily ranges in bitcoin and ether of $986 and $72 respectively.

Crypto markets came under added pressure into the end of last week and we suspect there are three critical drivers behind the bearish price action.

The first negative driver is the resurgence in hawkish talk out from various Fed officials. Fed Bowman, Kashkari, and Barkin are some of the most recent officials to talk about their concerns about elevated inflation and the possibility for higher interest rates.

Of course, higher interest rates means a stronger US Dollar as yield differentials flow back into the US Dollar, which then translates to less demand for cryptocurrencies.

The second negative driver is liquidity, or perhaps better described as a lack thereof. Developments around larger market makers like Jane Street and Jump Crypto announcing intentions to wind down crypto exposure, are not the type of developments that bode well for prices.

We’ve also seen plenty of attention around Grayscale and its frustration with US regulation around where it holds assets in custody. And all of this plays into the bigger issue of a lack of a clear regulatory framework, which is forcing a drain of liquidity in the market.

Finally, there are technical considerations that need to be addressed with respect to the latest run of weakness. Bitcoin’s breakdown below major support this past Friday has opened the door for a deeper pullback that could take the price back down to $22,000.

Ultimately however, we remain optimistic there will be plenty of demand for crypto irrespective of the Fed policy trajectory, we will see an uptick in demand as we finally do get that overdue regulatory clarity, and the technical picture will improve once this correction plays out.