Bitcoin Trading Volume Declines to a 5-Year Low: Report
- Bitcoin volume has dropped to a 5-year low amid the recent slump in the industry.
- A CryptoQuant research said that on-chain data shows a significant decrease in trading volume.
- The number of daily spot exchange transactions reached a mere fraction of what they were in March 2023.
- Entities holding BTC for 155 days at most currently find the majority of their funds at an unrealized loss.
Bitcoin has recently experienced a notable decline in trading volume across various exchanges. As the global economy grapples with ongoing macroeconomic uncertainty, investors have become increasingly cautious about the potential risks involved. These concerns have led to a significant reduction in daily Bitcoin exchange trading volumes, reaching levels not seen since 2018.
On-chain analytics platform CryptoQuant published research on September 25, which covers both spot and derivatives exchanges. It signals a major decrease in trading activity since bitcoin entered its current level in March this year. For instance, in the past week alone, the number of daily spot exchange transactions reached a mere fraction of the bustling activity observed at the time.
Analyst Caue Oliveira believes that the primary catalyst for this decline is the growing uncertainty around the macroeconomic landscape. He pointed to the ongoing economic policy shifts in the United States, with the Federal Reserve oscillating between interest rate hikes and pauses this year. He states:
“The actions of the United States Central Bank perpetuate a constant feeling of uncertainty, leaving investors waiting for a possible recession.”
Research stated that the fear of recession has resulted in both individuals and institutions adopting a more cautious approach to bitcoin trading, plummeting overall volumes. Notably, bitcoin holders have chosen to keep hold of their BTC rather than sell at the first sign of profit. The report reads:
“Instead of seeking quick profits through short-term trading, more and more people are viewing bitcoin and other cryptocurrencies as a long-term investment.”
Interestingly, short-term holders—entities holding BTC for 155 days at most—currently find the majority of their funds at an unrealized loss. This is because their cost basis is exceeding the current BTC spot price.
In different research earlier this week, CryptoQuant contributor Yonsei_dent concluded that the cost basis of Bitcoin newcomers would act as “strong resistance.” According to him, the traders who entered the market over the past year would have a stronger tendency to buy and sell in the short term.
As reported earlier by Bitnation, the Bitcoin Lightning Network has secured a strong adoption rate recently, with exchanges like Coinbase, Binance, Bitfinex, and Kraken announcing support for the same.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
