Bitcoin Exchange Volume Hits 5-year Lows as Fed Sparks HODLing

Declining Trading Volume Signals Uncertainty for Bitcoin

New research from on-chain analytics platform CryptoQuant reveals that Bitcoin (BTC) exchange trading volume has reached levels not seen since 2018. Traders are grappling with ongoing macroeconomic uncertainty, causing interest in transacting Bitcoin to wane. The data shows a significant decrease in daily BTC volumes since the cryptocurrency entered its current range back in March. Last week, there were only between 8,000 and 15,000 daily spot exchange transactions, compared to the over 600,000 daily tally seen in March.

Macroeconomic Climate Fuels Fear Among Bitcoin Investors

Analysts attribute the decline in trading volume to the prevailing global economic climate. Investors are increasingly concerned about the macroeconomic scenario, particularly due to the actions of the United States Central Bank. The constant uncertainty created by the Federal Reserve leaves investors waiting for a possible recession. As a result, Bitcoin hodlers choose to hold on to their BTC, believing in its long-term future value, rather than seeking quick profits through short-term trading.

Tough Times for Bitcoin Speculators

Short-term holders of Bitcoin are now experiencing unrealized losses, with their cost basis higher than the current spot price of the cryptocurrency. In further research, it is revealed that the cost basis of newer Bitcoin investors will act as strong resistance. These investors, who entered the market within the past year, tend to engage in short-term buying and selling. A chart accompanying the research displays the resistance and support levels formed by unspent transaction output (UTXO) numbers divided by age group.

Declining External Interest in Bitcoin

Not only are trading volumes decreasing, but external interest in Bitcoin is also hitting new lows. According to Google Trends data, searches for "Bitcoin" as a term have reached their lowest levels since October 2020. This suggests a declining interest in the cryptocurrency from the general population.

This article does not contain investment advice. All investment and trading decisions carry risks, so readers should conduct their own research before making any financial decisions.