The Bitcoin trading volume observed a surge earlier as the price of the crypto crashed below $40k. However, the metric has now once again come back down as the coin has become calmer.
Bitcoin Trading Volume Sharply Declines Following A Brief Uplift
As per the latest weekly report from Arcane Research, the BTC trading volume has seen a sharp decline recently and is now returning to “normal” values after the earlier surge.
The “daily trading volume” is an on-chain indicator that tells us the total amount of Bitcoin that was involved in transactions on any given day.
When the value of this metric goes down, it means activity on the BTC network is dropping off as a lesser amount of coins is being transacted on the chain.
Such a trend may be there because investors are currently waiting for the price to reach a certain level before they make their move. It may also show a general lack of interest in the crypto at the moment.
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On the other hand, when the trading volume moves up, it implies the chain is becoming more active. High values of the metric usually make up for an ideal environment for big moves in the price of the coin.
This is because a lot of traders are needed to sustain such moves, and an inactive network lacks enough of them. However, it works both ways. Big price moves naturally also attract more volume as certain traders’ targets are met and hence they move their coins accordingly.
Now, here is a chart that shows the trend in the Bitcoin trading volume over the past year:
Looks like the value of the indicator has sharply declined recently | Source: The Arcane Research Weekly Update - Week 4
As you can see in the above graph, just recently the Bitcoin trading volume sharply rose to high values as the price of the coin fell below $40k.
But over the past week, the indicator has again come down to relatively low values as the crypto has mostly seen sideways movement in the period.
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The report notes that if the coin can manage to break $40k, the trading volume may surge similarly to when BTC went below this level.
BTC Price
At the time of writing, Bitcoin’s price floats around $36.7k, down 0.5% in the last seven days. The below chart shows the trend in the price of BTC over the last five days.
BTC's price seems to have declined below $47k again over the last 24 hours | Source: BTCUSD on TradingView
Featured image from Pixabay.com, charts from TradingView.com, Arcane Research
Source: https://bitcoinist.com/bitcoin-trading-volume-crashes-again-brief-surge/