Bitcoin has continued to trade sluggishly over the past week after getting rejected at the $30,000 threshold mid-last month, leaving many in the industry pondering its next move.
Furthermore, Bitcoin’s failure to retest the crucial $28,000 ceiling from its August high highlights a broader weakness. As a result, the Bitcoin rally witnessed last week proved short-lived. Pundits have argued that on the upside unless Bitcoin successfully breaches the end-of-August high of $28,000, the path of least resistance remains sideways to down. Looking at the bigger picture, any break below $25,000 could potentially spell further price weakness.
Nevertheless, beyond the subdued prices, Bitcoin’s spot trading volume has plunged to a six-year low. According to data from on-chain analytics firm CryptoQuant, transaction volume this week has ranged from 8,000 to 15,000 daily transactions.
This represents a stark decline compared to the more than 600,000 transactions recorded in March of the same year.
This revelation was highlighted by “Caueconomy”, a pseudonymous analyst from the firm who offered insights into the reasons behind this significant drop in Bitcoin spot trading. According to him, one of the primary factors cited is the growing fear regarding the macroeconomic scenario.
“The actions of the United States Central Bank perpetuate a constant feeling of uncertainty, leaving investors waiting for a possible recession,” wrote Caueconomy.
Interestingly, the pundit noted that this decline in spot trading volume also reflects a shift in investor sentiment towards holding cryptocurrencies for the long term rather than engaging in frequent trading.
“Instead of seeking quick profits through short-term trading, more and more people are viewing bitcoin and other cryptocurrencies as a long-term investment. They are more interested in holding their coins, believing in their future value, than selling at the first sign of profit,” he added.
Meanwhile, data from Santiment also shows that Bitcoin is experiencing its lowest level of trading volume in terms of dollar value since March 2019. Interestingly, this decline coincides with a reduction in the supply of Bitcoin on exchanges, a trend that began nearly three years ago. Historically, this has suggested that investors may be cautious, waiting for a clear signal before actively entering the market and potentially driving higher prices.
That said, amid these developments, the crypto market remains on edge, awaiting signs of a new direction for the world’s largest cryptocurrency, even as crypto “Uptober” nears. BTC was trading at $26,179 at press time after a 0.38% drop over the past 24 hours. The price has shed 3.56% of its value in the last week.