Crypto trading volume exceeded 40% in June: RPT

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Yahoo Finance Brian Sozzi, Julie Hyman, Myles Udland and Jared Blikre discuss cryptocurrency trading volumes and the prospects for a possible collapse.

Video transcript

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JULIE HYMAN: Well, cryptocurrencies are mostly trading lower during today’s session. And there is new data, a Reuters report citing data from CryptoCompare, that the trading volume for cryptocurrency overall fell by over 40% in June, which is sort of, I don’t know, more than one would think, even with the price action we’ve seen. Jerry Blikre is back with us to talk to us about it.

And I know there are different ways of measuring, you were just talking to us during the break, different ways of measuring the drop in activity that we’ve seen for Bitcoin and the like. So guide us through this.

JARED BLIKRE: Of course. First of all, I’m glad Bitcoin didn’t crash over the weekend. Because every Friday I think, wow it’s going to be the weekend, it’s not something I hope – Yes, Bitcoin trading volumes have slumped. And there’s something called the hash rate, which you can think of as a network, the total processing power of the Bitcoin network, which just completely collapsed. And more so than when Bitcoin peaked at 20,000 several years ago at the end of 2017, then crashed to around 3,000.

So it got – it got a lot of attention. And let’s look at some graphics here on Wi-Fi Interactive. So first of all, I have the year-to-date, excuse me here, looks like I don’t have access to Interactive Wi-Fi. But if we were to look at a chart, OK, Bitcoin has essentially been trading sideways for several months now, without really doing much. Considering the hash rate, I’m frankly surprised that it hasn’t really gone over 30,000.

The fact that he didn’t do that gives me some hope that we’ll be able to break through. We have technical levels. If you look at that graph there, 35,000 is the first big one, so we have 40, 45,000. If we eliminate 45,000, I think we’re going to be able to recover some records. But until people are more interested in using Bitcoin and transferring it or doing other things that require the services of miners, I don’t really see it going anywhere.

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But the fact that he hasn’t yet collapsed is very encouraging, especially given all the negative techniques I’ve seen.

MYLES UDLAND: You know, and Jared, reporting this and certainly, you know, Bitcoin is part of the conversation in the financial markets, the mainstream conversation. Bitcoin is part of the conversation about risky assets, let’s say. But going back to publicly traded stocks, which we saw with Coinbase’s public offering, it continues to hit me that this offering, in a way, marked the – I mean, it’s starting to look like the end of this cycle, I guess.

And I know Coinbase has talked a lot in their prospectus about the fact that there have been four separate crypto cycles. And their argument is that we were in the middle of the fourth. And I’m starting to wonder if maybe the fourth is finished. And so while we traded at 10,000 for a while, we might be trading at 30,000 for a while before we start to pull ourselves together here and we see Bitcoin in the six digits and so on.

JARED BLIKRE: Yeah, I mean you usually need a market clearing event when you have a bottom. And so, when Bitcoin rose to 20,000, it collapsed. But it took a long time to get down to 3,000. That’s when people started to throw in the towel. And let me just – let me just quickly explain why the price of Bitcoin might crash. And that’s because the miners have to make money.

And if their services aren’t needed because people aren’t processing or trying to initiate transactions, then they actually have to sell their stock of Bitcoin, convert it into fiat currency to pay their bills. And so it feeds on itself. And this can lead to very rapid price movements. When Bitcoin gathered up to 63,64,000, no matter where that peak was, when it went from 20,000 to 30,000, it did so in a very quick amount of time. And there was very little trading volume.

And so folks, if there aren’t enough people who have come in at a certain level, say 25,000, 27, 22,000, then the price is probably not going to end there. That’s why 30,000 is such a huge level. There’s almost no volume between 30,000 and 20,000. And besides, there really isn’t much at 20,000. You have to go down to 13,000 to start seeing a really big volume. transactions.

And that’s why I think there is probably going to have to be a market clearing event. Crude oil did it last year. It went down to minus 40. I never thought I would see that happen. I don’t think Bitcoin is going negative. But I’m just saying, we have to shake some of the weaker hands here first. And I’m just surprised it didn’t happen.

JULIE HYMAN: Well, we’ll see if that’s the case. Every weekend, Jared Blikre waited. We’ll see if it’ll happen another weekend.

JARED BLIKRE: I don’t hope so, by the way.

JULIE HYMAN: Right. Heard. But you see it in your tea leaves which are good. Very good. We’re going to take a little break.

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