Bitcoin On-Chain Volume Dips: A Multi-Year Perspective

Bitcoin, currently hovering around the $26k mark, is under intense scrutiny as market participants hunt for solid cues. Despite growing institutional appetite for BTC, average trading volumes have hit their lowest in nearly five years. Figures from CoinGecko indicate Bitcoin's daily traded volume stands at roughly $10 billion, against a market cap of around $500 billion. Data from CryptoQuant points to a sharp decline in BTC held across crypto exchanges, falling to levels not seen since 2018.

On August 12, trading volume across these exchanges was approximately 112,317 BTC, a number that hasn't been seen since November 10, 2018 (at the very end of the last bear market). The figure had slightly increased to around 129,307 coins by August 26.

Dwindling Bitcoin Transaction Activity

The crypto downturn that began late in 2021 continues to cast its shadow into 2023. Numerous crypto-focused entities, lacking robust business strategies, have succumbed to this ebbing tide of trading volume. However, it's not all gloom. The introduction of clearer cryptocurrency regulations, especially in influential regions like the European Union, is encouraging more capital to flow into the sector.

Consequently, as we approach the anticipated Bitcoin halving in 2024, there's a broad expectation of a significant uptick in crypto trading volumes.

"Trading volumes decrease in bear markets as retail investors leave," commented Julio Moreno, head of research at CryptoQuant. "This happened during 2022 on most exchanges. As we progress further into a bull market, the trading volume may continue to pick up."

Some speculate that bitcoin is in a holding pattern, anticipating the green light for a spot ETF in the US. Currently, the US SEC is examining multiple Bitcoin ETF proposals, with giants like BlackRock Inc (NYSE: BLK) leading the charge.

A deep dive by Santiment reveals a staggering 90% dip in Bitcoin transaction volume from its previous year's high. Santiment, however, offers a silver lining, suggesting that this dip doesn't necessarily spell doom but might reflect market apprehensions.

Additionally, regardless of market fluctuations, Bitcoin's journey towards mainstream acceptance is expected to march on. Mounting global inflation coupled with geopolitical tensions is nudging more investors towards digital stores of value like Bitcoin and Ethereum.

Tracking Bitcoin's Price Movements

After basking in the positive market sentiment in early 2023, Bitcoin's trajectory took a bearish turn. It lost the critical support level of around $28k on August 17 weeks, and is currently trading around $26k.

Subscribe to our newsletter and follow us on Twitter.