Bitcoin Rally Sustainable? Rising Trading Volumes Suggest So

Data shows the Bitcoin spot trading volumes have sharply risen alongside the rally, an indication that this momentum is perhaps sustainable.

Bitcoin 7-Day Average Trading Volume Shows Rapid Uptrend

As per the most recent weekly report from Arcane Research, the present trading volume highs haven’t been observed because the collapse of the crypto exchange FTX back in November of last yr. The “every day trading volume” is an indicator that measures the full amount of Bitcoin being transacted on the Bitwise 10 exchanges on any given day.

While the metric may only account for volumes on the Bitwise 10 exchanges, the activity measured by it still provides a good idea concerning the trend being followed by the broader spot market.

When the worth of this indicator rises, it means a lot of coins are being transacted on the spot market right away. Such a trend suggests traders are lively currently.

However, low values imply the BTC market isn’t seeing much activity in the meanwhile. This trend can mean the overall interest within the cryptocurrency amongst investors is low currently.

Now, here’s a chart that shows the trend within the 7-day average every day Bitcoin trading volume over the past yr:

Looks just like the value of the metric has shot up in recent days | Source: Arcane Research's Ahead of the Curve - January 17

As displayed within the above graph, the Bitcoin every day trading volume has observed some rapid rise within the last week or so, because the BTC price has rallied. The 7-day average value of the indicator has now hit $10.8 billion, a high that hasn’t been seen because the FTX crash.

In total, the surge within the metric’s value has amounted to 114% over the past week, a really significant uplift. From the chart, it’s apparent that Binance still accounts for the overwhelming majority of the activity, as its trading volume currently stands at $9.8 billion. The crypto exchange first began dominating the market when it comes to volume back when the platform removed fees on its Bitcoin trading pairs.

The remaining of the exchanges are seeing little or no volume recently, which led to low revenues for a lot of them and caused them to undergo latest rounds of restructuring. Essentially the most notable example could be Coinbase, which needed to cut 1,000 of its staff just a number of days back.

With this latest rise in market activity, nevertheless, the collective volume of exchanges aside from Binance has surged to about $1 billion, something that these platforms would probably find encouraging amid these times.

The undeniable fact that these high trading volumes have come alongside the Bitcoin rally could possibly be a positive sign for it. As previously, all significant price moves have often been accompanied by a surge in activity.

The explanation behind that is that rallies like these require a lot of traders to maintain the fuel going. As the present rally is having fun with large trading volumes, it could possibly be sustainable for some time still.

BTC Price

On the time of writing, Bitcoin is trading around $21,200, up 22% within the last week.

Bitcoin Price Chart

BTC seems to have stagnated over the previous couple of days | Source: BTCUSD on TradingView

Featured image from Hans Eiskonen on Unsplash.com, charts from TradingView.com, Arcane Research

Leave a Comment

Copyright © 2024. All Rights Reserved. Finapress | Flytonic Theme by Flytonic.