Bitcoin Trading Volume Is Falling, Rally Losing Steam Already?

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Data shows that Bitcoin trading volume has continued to decline lately, suggesting that the latest rally may be losing momentum.

Bitcoin Spot trading volume continues to fall this week

According to the latest weekly report from Arcane Research, BTC spot volume has continued to decline over the past week.

The “trading volume” is an indicator that measures the total amount of Bitcoin involved in spot trades on a given day.

When the value of this indicator rises, it means that more coins are now changing hands. This trend shows that the network is becoming more active.

Usually, high volumes are an ideal environment to push through large price movements. This is because to support such moves you need a large number of traders in the market. That’s exactly what high values ​​of the metric represent.

Related literature | Data: Long-term Bitcoin holder supply has stagnated high since October

On the other hand, declining volumes imply that the Bitcoin network is becoming inactive. Such a trend could be a sign of general disinterest in crypto among investors right now.

Here is a chart showing the trend in BTC trading volume over the past year:

The value of the indicator seems to have fallen recently | Source: Arcane Research’s The Weekly Update – Week 11, 2022

As you can see in the chart above, the daily Bitcoin volume has been declining for a while now. Over the past seven days, this downward trend appears to be continuing.

The 7-day average spot volume is currently around $4 billion. In the past week, the stat’s value has soared to $7 billion in just one day.

Related literature | Bitcoin Bullish Signal: Exchange Reserve Loses Another 50k BTC Last Week

Price activity usually revives the indicator as it attracts more traders. However, market activity has been slowing down quite a bit lately, despite Bitcoin’s value seeing a surge in recent days.

A lack of traders means it is unlikely this rally could progress further. Like much of the recent trend, the coin’s price may now begin to consolidate rather than catch any real movement.

BTC price

At the time of writing, Bitcoin’s price is hovering around $42.2k, up 5% over the past seven days. In the past month, the crypto has accumulated 10% in gains.

The chart below shows the trend in the price of the coin over the past five days.

Looks like BTC’s price broke past $43k yesterday | Source: BTCUSD on TradingView

As the chart shows, it looks like the Bitcoin rally is already starting to lose steam, just as the trading volume had indicated.

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

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