Bitcoin exchanges are experiencing a significant decline in trading volume as traders grapple with ongoing macroeconomic uncertainty. Recent research from on-chain analytics platform CryptoQuant reveals that the daily trading volumes for Bitcoin have reached lows not seen since 2018.
The stagnant Bitcoin price action over the past few months has caused interest in transacting the cryptocurrency to wane. CryptoQuant’s data, which tracks activity on both spot and derivatives exchanges, highlights a substantial decrease in trading volumes since Bitcoin entered its current range in March. In the past week, there have been only 8,000 to 15,000 daily spot exchange transactions, a far cry from the over 600,000 daily transactions observed in March.
One of the main reasons behind this decline is attributed to the growing fears surrounding the macroeconomic climate. The actions of the United States Central Bank, particularly its wavering economic policies, have perpetuated a sense of constant uncertainty among investors. The Federal Reserve’s oscillation between interest rate hikes and pauses has left investors wary of a possible recession.
As a result of this uncertainty, Bitcoin holders have opted to hold onto their BTC capital rather than engage in short-term trading for quick profits. Many investors now view Bitcoin and other cryptocurrencies as long-term investments and believe in their future value. This mindset has led to a decline in trading volume as investors are more interested in holding onto their coins than selling them for immediate profit.
To compound the challenges faced by Bitcoin speculators, short-term holders who have held BTC for no more than 155 days are now witnessing an unrealized loss, with their cost basis higher than the current spot price. Another research study from CryptoQuant suggests that the cost basis of new Bitcoin investors would act as a strong resistance level, hindering any upward price movement.
Furthermore, external interest in Bitcoin exposure appears to be lacking. Google Trends data indicates the lowest interest in the search term “Bitcoin” since October 2020. This lack of interest further reflects the overall decline in trading volume and investor sentiment.
It is important to note that this article does not provide investment advice or recommendations. Investing and trading in cryptocurrencies pose inherent risks, and individuals should conduct their own research before making any investment decisions. The current state of Bitcoin trading volume is a reflection of the ongoing macroeconomic uncertainty and the shift in investor behavior towards long-term Bitcoin holdings.
