Why Are Bitcoin Spot Volumes Shockingly Low While Price Soars?

Despite the price of Bitcoin soaring and making a new all-time high, the crypto’s spot trading volume remains shockingly low.

Bitcoin Trading Volume Is Unusually Slow

As per the latest weekly report from Arcane Research, while the price of BTC shows strong momentum up, the trading volume has been unusually low.

The “daily spot trading volume” is a Bitcoin indicator that measures the total amount of coins moved on the chain each day.

When the value of the metric moves up, it means the network is observing greater trading activity. This implies that investors are interested in moving around their coins during this period.

While if the indicator’s value goes down, it means the network isn’t seeing much activity. Periods with such a trend may mean investors are either not interested in the Bitcoin market, or they are simply waiting before they move their positions.

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

BTC's daily trading volume has declined in the last month | Source: The Arcane Research Weekly Update - Week 44

As the above graph shows, the indicator’s value has been really low in recent weeks, despite Bitcoin’s price soaring during the same period.

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The current seven-day average daily trading volume measures $5.6 billion, a decline of $0.4 billion in the last week.

This trend is very different from the one seen during the start of the early 2021 bull rally. When Bitcoin made a new ATH in December 2020, the trading volume grew rapidly, and then throughout the run it remained at high values.

But in spite of the crypto setting a new ATH above $68k on Tuesday, the volumes have remained unusually low. The reason behind this is that there are few sellers in the market right now. And for high trading volume, both buyer and seller volumes are needed.

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

BTC Price

At the time of writing, Bitcoin’s price floats around $66.6k, up 6.6% in the last seven days. Over the past month, the crypto has gained 17.8% in value.

Below is a chart that shows the trend in the price of the coin over the last five days.

BTC's price made a new ATH above $68k yesterday, but has since come down a bit | Source: BTCUSD on TradingView

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