Recent data shows that Bitcoin’s trading volume is on the decline, suggesting that it may have lost its momentum.
In this week’s Bitcoin spot trading volume is continuing to fall
According to the latest weekly report from Arcane Research, the BTC spot volume has observed further decline in the past week.
The “trading volume” is an indicator that measures the total amount of Bitcoin being involved in spot trades on any given day.
If this indicator is increasing in value, that means more coins have been exchanged. This indicates that the network has become more active.
High volume creates an environment that is conducive to big price swings. Because of the large number of traders needed to sustain such price movements, it is necessary that there are many participants in the market. That is why high values of this metric are so important.
Related reading | Data: Bitcoin Long-Term Holder Supply Has Stagnated Since October High
However, falling volumes could indicate that Bitcoin is becoming inactive. This trend could be an indication of disinterest among crypto investors.
Below is a chart that illustrates the trends in BTC Trading Volume for the past one year.
The indicator's current value appears to be decreasing. Source: Arcane Research, The Weekly Update Week 11, 2022| Source: Arcane Research's The Weekly Update - Week 11, 2022
You can see that Bitcoin’s daily volume has been declining for some time now, as you can see from the graph. This downtrend appears to have been continuing for the last seven days.
The average spot volume over the last seven days stands at $4 billion. In the last week, the metric’s value has surged to $7 billion on only a single day.
Similar reading: Bitcoin Bullish Signal: Exchange Reserve Loses 50k BTC During the Past Week| Bitcoin Bullish Signal: Exchange Reserve Loses Another 50k BTC Over Past Week
The indicator is usually revived by price activity as more traders are attracted to it. Although Bitcoin has seen some significant gains in the last couple of days, the market activity has been quite declining.
A lack of traders means that it’s unlikely this rally would be able to march any further. Just like much of the recent trend, the coin’s price may start consolidating now instead of catching any real movement.
BTC price
At the time of writing, Bitcoin’s price floats around $42.2k, up 5% in the last seven days. In the last month, crypto has seen 10% gains.
Below is a chart showing the change in coin price over the past five days.
BTC price jumped past $43k yesterday.| Source: BTCUSD on TradingView
It appears that Bitcoin’s rally is losing momentum, as shown in the chart.
Unsplash.com's featured image. Charts by TradingView.com. Arcane Research: