Bitcoin trading volume drops - without breaking the $50,000 mark
According to data, bitcoin trading volume is once again on the way down as the cryptocurrency fails to reach the $50,000 mark.
Bitcoin trading volume declines
According to a report by Arcane Research, BTC has not yet managed to test the $50,000 mark - however, trading volume is already moving downwards.
Real bitcoin trading volume is an indicator that shows the amount of coins traded during a certain period. The 7-day average shows the daily bitcoin trading volume, which is calculated using a weekly average.
When the value of the ratio increases, it means that more investors are interested in trading the cryptocurrency. This is usually the case when BTC is experiencing high volatility. During such times, buyers tend to change their positions on the market, so more transactions take place on the network.
On the other hand, when the market has low volatility and the price moves sideways, the trading volume tends to decrease.
As the chart above shows, BTC trading volume initially started to decline after reaching a peak at the beginning of the month. However, the indicator quickly recovered and returned to a similar level of around $7 billion.
But now the trading volume seems to be moving downwards again - the value of the indicator has fallen to $5 billion. The reason for this drop is likely to be the stagnant bitcoin price over the last week.
The behaviour is not particularly worrying at the moment. A slowdown in price activity simply means that fewer buyers are interested in the market.
Currently (time of this writing) the bitcoin price is hovering around $44.4k, a decline of 1.8% in the last 7 days. In the last month, the cryptocurrency has gained 49% in value.
Here is a chart showing the price development of the coin over the last three months:
Last month, BTC saw a strong upward trend as the price rose from $30,000 to around $48,000. This trend eventually subsided and the price moved sideways last week.
Today bitcoin had a small dip as the price fell from over $47k to under $44k. Unclear where it goes from here.
If BTC breaks through the $50k area soon, the market will need a surge in trading volume. However, if the price moves up without a sharp increase in trading activity, it could mean that the market is exhausted. In such a situation, the price increase is no longer sustainable - and a crash could occur.