Bitcoin and Altcoin Trading Volume Has Dropped, Sign of Waning Trader Interest

On-chain data shows Bitcoin and the altcoins have seen their trading volume decline recently, a sign that trader interest in the market is waning.

On-chain data shows that Bitcoin and the altcoins have seen their trading volume decrease recently, a sign that trader interest in the market is waning.

Trading Volume Is Down For Bitcoin And Altcoins As Interest Fades

In a new post by on-chain analytics firm Santiment, the firm discussed how the trading volume has changed for the various assets in the cryptocurrency sector.

Here, “trading volume” is defined as the total amount of a given coin that was involved in trading activity on all exchanges in the past 24 hours. This metric shouldn’t be confused with the “transaction volume,” which keeps track of the amount involved in transfers across the network, including peer-to-peer (P2P) trades.

Rising trading volume indicates that investors are engaging in more trades on exchanges, which in turn implies they are showing interest in the cryptocurrency.

On the other hand, the indicator dropping suggests traders aren’t paying as much attention to the coin, as they are lowering the number of their moves.

Now, here is the chart shared by the analytics firm that shows the trend in the trading volume for Bitcoin and the various top altcoins over the past month:

As is visible, the trading volume across the sector hit a peak late last month, which means the investors were participating in a large amount of spot moves related to Bitcoin and company.

The spike in trading activity came as prices of the various assets observed a plunge. Generally, the market tends to come alive in volatile periods, as traders rush to make panic moves, whether for selling or buying. As such, the volume increase would make sense.

However, while volatility has continued in the last couple of weeks since then, the volume has interestingly been following a downward trajectory instead. To be sure, there have been spikes deviating to the upside, but the overall trend has remained in the down direction.

“When trading volume for major cryptocurrencies consistently drops, even during slight price recoveries (like we have seen Wednesday), it typically points toward diminishing trader enthusiasm,” explains Santiment.

Historically, price moves have usually required a certain level of interest from the investors to be sustainable. This is because it’s only when a large amount of investors are making trades that moves like this can obtain the fuel that they need to keep going.

Hence, with trader participation seemingly reaching exhaustion, it’s possible that Bitcoin and other assets may not be able to put together any lasting recovery rallies.

“To signal a healthier and more sustainable recovery, bulls generally will want to see both rising prices and rising volumes simultaneously,” explains the analytics firm. “Until trading activity increases meaningfully, cautious market sentiment is likely to dominate.”