Why are Bitcoin Spot volumes insanely low as prices skyrocket?

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Despite the surge in the price of Bitcoin and its new all-time high, the volume of crypto spot transactions remains incredibly low.

Bitcoin trading volume is unusually slow

According to the latest weekly report from Arcane Research, while the price of BTC is showing a sharp rise, the trading volume has been unusually low.

“Daily spot transaction volume” is a Bitcoin indicator that measures the total number of coins moved on the chain each day.

When the value of the metric increases, it means that the network is observing more business activity. This implies that investors are interested in moving their coins during this time.

Whereas if the value of the indicator decreases, it means that the network is not seeing much activity. Periods with such a trend can mean that investors are not interested in the Bitcoin market, or that they are simply waiting before moving their positions.

Now here is a chart that shows the trend of BTC trading volume value over the past year:

Daily BTC Trading Volume Decreased Last Month | Source: Weekly Arcane Research Update – Week 44

As can be seen from the graph above, the value of the indicator has been very low in recent weeks, despite the Bitcoin price spike during the same period.

Related reading | Elon Musk will sell 10% of his Tesla shares to buy Bitcoin? The community speculates

The seven-day average daily trading volume is $ 5.6 billion, down $ 0.4 billion from last week.

This trend is very different from that seen at the start of the bullish rally in early 2021. When Bitcoin created a new ATH in December 2020, the trading volume grew rapidly and then throughout the run it stayed at values high.

But despite the crypto pegging a new ATH above $ 68,000 on Tuesday, volumes remained unusually low. The reason behind this is that there are few sellers in the market at the moment. And for a high volume of transactions, volumes of buyers and sellers are required.

Related reading | Apple CEO Tim Cook owns Bitcoin and Ethereum as part of diversified portfolio

Investors seem to be waiting for the price to appreciate further before realizing their profits. Such a situation can create a very volatile market as there are hardly any orders on the books.

BTC price

As of this writing, the price of Bitcoin is floating around $ 66.6,000, up 6.6% over the past seven days. Over the past month, the crypto has gained 17.8% in value.

Below is a chart that shows the coin’s price trend over the past five days.

The price of BTC made a new ATH above $ 68,000 yesterday, but has since fallen a bit | Source: BTCUSD on TradingView Featured Image from Unsplash.com, Charts from TradingView.com, Arcane Research

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