Bitcoin & Altcoin Trading Volumes Plunge, What Does It Mean?
Data shows that the combined trading volume of Bitcoin and altcoins has reached its lowest level in over a year. Here’s what that might mean.
7-day volumes in the cryptocurrency market have recently dropped
According to data from on-chain analytics firm Holy, volumes were last at significant levels in March of this year. “Trading volume” is an indicator that measures the total daily amount of a given asset being moved on the blockchain.
When the value of this metric is high, it means that the cryptocurrency in question is currently observing the movement of a large number of currencies. Such a trend suggests that investors are actively trading the market these days.
On the other hand, low values of the indicator can be a sign that there is not much interest in the asset from investors at the moment, as they are not participating in any significant trading activity on the network.
Now, here’s a graph that shows the 7-day trading volume trend for some of the biggest assets by market capitalization in the industry over the past year:
The value of the metric seems to have observed some decline in recent days | Source: Santiment on Twitter
As you can see in the chart above, the combined 7-day trading volume of these top assets rose in March as Bitcoin and other currencies saw a strong recovery from a local bottom.
Since then, however, the indicator has shown a general downward trend and now the metric has hit some pretty low values. This means that over the past seven days, assets have seen transactions of very small value.
The current combined trading volume for these large-cap assets is, in fact, the lowest since over a year ago. From the graph, it is visible that of these coins, only Bitcoin (highlighted in green) and Ethereum (colored in blue) still have appreciable volumes.
The indicator value for the altcoin market has always been very low compared to Bitcoin and Ethereum, but recently, it has seen trading volumes really dry up.
Naturally, the current low volumes in major assets may suggest that there is not much interest in trading cryptocurrencies among general investors.
Generally, a sharp price action such as a rally or a dip attracts a large number of users to the market because these movements are usually exciting for them. Such moves are also sustainable only if they can continue to draw attention to the cryptocurrency, as large numbers of traders are needed to fuel moves of this type.
Movements that fail to attract any significant attention, however, eventually die. For this reason, the latest low volumes could be a worrying sign for the sustainability of Bitcoin and other asset price recovery.
At the time of writing, Bitcoin is trading around $27,300, up 1% over the past week.
Looks like BTC has been moving sideways | Source: BTCUSD on TradingView
Kanchanara featured image from Unsplash.com, charts from TradingView.com, Santiment.net