Bitcoin’s On-chain Transaction Volume Drops to Multi-Year Low amid Bearish Sentiments

Bitcoin’s On-chain Transaction Volume Drops to Multi-Year Low amid Bearish Sentiments

Bitcoin (BTC) price continued to precariously trade around $26k on Tuesday, as investors closely watched for convincing reasons to long the market. Despite a notable increase in demand for the top digital asset, on-chain data analysts show the average traded volume has dropped to nearly five-year lows. According to market data provided by Coingecko, Bitcoin reported an average daily traded volume of about $6.7 billion on a market capitalization of approximately $507 billion. A report by CryptoQuant shows that the total volume of Bitcoins held on all cryptocurrency exchanges fell earlier this month to its lowest level since 2018.

Specifically, CryptoQuant highlighted that Bitcoin’s trading volume on all cryptocurrency exchanges sat at about 129,307 coins on August 26. Earlier on August 12, the figures dropped to about 112,317 coins, the lowest level since November 10, 2018.

Waning Bitcoin Trading Volume

The cryptocurrency bear market that began at the end of 2021 has sustained through 2023. Several crypto-related companies that did not have a proper business model have already collapsed amid declines in trading volume. Nonetheless, increased clear crypto regulatory frameworks from different jurisdictions led by the European Union, and the United States have helped pave the way for more funds to proliferate the industry.

As a result, the overall crypto trading volume is expected to rise exponentially through the Bitcoin halving in 2024.

“Trading volumes decrease in bear markets as retail investors leave,” Julio Moreno, head of research at CryptoQuant, noted. “This happened during 2022 on most exchanges. As we progress further into a bull market, the trading volume may continue to pick up.”

Experts believe that the Bitcoin market could be waiting for a spot ETF approval in the United States. Furthermore, the United States SEC is currently reviewing several Bitcoin ETFs led by BlackRock Inc (NYSE: BLK).

According to an on-chain analysis conducted by Santiment, the Bitcoin transaction volume has dropped about 90 percent from last year’s peak. However, Santiment noted that the significant decline in Bitcoin’s trading volume does not necessarily signal a bearish outlook but indicates the trader’s FUD.

Moreover, Bitcoin’s mainstream adoption is expected to continue in the coming years irrespective of the market conditions. The rising global inflation and heightened uncertainties revolving around geopolitical differences have most investors more inclined to digital assets like Bitcoin and Ethereum.

Price Action

After enjoying bullish sentiments during the first half of 2023, Bitcoin price entered a bearish outlook after losing grip of the support level around $29.1k in the past few weeks. According to the latest market data, Bitcoin price exchanges around $26,057, down approximately 11 percent in the past two weeks.


Bitcoin’s On-chain Transaction Volume Drops to Multi-Year Low amid Bearish Sentiments

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