Over the past week, Bitcoin traders have exercised caution in their approach to the cryptocurrency’s price action. This sense of caution has had a noticeable impact on trading volume, with both spot Bitcoin trading and Bitcoin derivatives on major crypto exchanges experiencing a significant decline compared to the beginning of the year.
According to on-chain data from CryptoQuant charts, the daily spot and derivatives trading volume of Bitcoin has been steadily decreasing since the first quarter of the year. This decline in trading volumes begs the question of what implications it holds for the future price of Bitcoin.
The decline in trading volumes has been quite steep this year, especially when compared to the highs reached in March during the Silicon Valley Bank fiasco. Since that period, the derivatives market has experienced a staggering 96% decrease, while the spot market has fallen by 98%.
Specifically, Bitcoin trading has been notably lower in the past week. Data from CoinMarketCap indicates that Bitcoin spot trading volume has decreased by 33.67% in a 24-hour timeframe. Furthermore, CryptoQuant data reveals that the spot exchange trade volume has plummeted from 50,692 to 9,627, an 81% decrease.
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The declining volumes are not exclusive to spot trading. The derivatives trade volume has also seen a significant decrease, dropping by 88% from 950,331 to 108,852.
When trading activity dwindles, it serves as a signal of waning interest from institutional traders and retail investors. Given Bitcoin’s status as the largest cryptocurrency globally, this lack of interest could have far-reaching implications not only for Bitcoin but also for the broader crypto market.
As of now, Bitcoin is trading at $26,556, and the lack of significant trading activity may result in continued sideways movement or even downward pressure on its price. The next crucial support level for Bitcoin is at $25,000, and a breach of this price could potentially lead to a prolonged bearish trend with increased selling pressure.
However, the current lower price levels might also entice investors to step in and increase trading volumes again. Some analysts, such as Captain Faibik, believe that Bitcoin could reach as low as $23,000 in October before experiencing a breakout and climbing to $34,500 by early next year. Similarly, Didar Bekbauov, the CEO of Bitcoin joint mining business Xive, believes that Bitcoin could surpass its year-to-date price of $31,700.
It’s important to note that the predictions and opinions mentioned above should not be taken as investment advice. Investing in cryptocurrencies always carries a certain level of risk.
In summary, the decline in trading volumes for Bitcoin spot and derivatives trading raises concerns about the future price of Bitcoin. The lack of interest from institutional traders and retail investors may result in continued sideways movement or even downward pressure on the price. However, some analysts suggest that this lower price range could represent an opportunity for investors, potentially leading to increased volumes and a subsequent price rise.
