As a seasoned crypto investor with a few battle scars from the volatile world of digital assets, I find the recent decline in Bitcoin transaction and exchange volume as a cause for concern but not entirely surprising. The trends outlined by Glassnode are reminiscent of past lulls in the market, where investors seem to lose interest due to sideways price action.
According to a recent report by Glassnode, Bitcoin‘s transaction activity seems to be slowing down, which could potentially indicate unfavorable conditions for Bitcoin.
Bitcoin Transaction Volume & Exchange Volume Are Both Down
As per the recent weekly report by Glassnode, the Entity-Adjusted Transfer Volume has seen a decrease. This “Transfer Volume” refers to a measurement that calculates the overall Bitcoin value participating in blockchain transactions.
This modified indicator specifically highlights the exchange activity occurring among distinct groups of investors, as identified by the clustering of related addresses performed by Glassnode. In simpler terms, it focuses on the trades made between these investor clusters rather than the overall volume of transactions.
In simpler terms, when the same person is transferring funds between their own wallets, this activity doesn’t impact the broader market significantly. Therefore, by eliminating these internal transactions, we get a more accurate picture of the actual trading volume that’s taking place. This is what we refer to as the Entity-Adjusted version.
The graph presented in the report by the analytics company demonstrates the progression of Entity-Adjusted Volume, as well as its short-term and long-term moving averages, for the recent years.
According to the graph, the daily transfer volume of Bitcoin (Entity-Adjusted) stands approximately at $6.2 billion. While this figure is substantial, it’s the trend that the indicator has been exhibiting lately that might be noteworthy.
Looking at the moving average of the past 30 days, it’s clear that the network activity has been decreasing over time and has even dipped below the moving average of a full year (365 days) more recently. According to Glassnode, this is generally interpreted as a negative trend.
Previously this year, the monthly average volume significantly outpaced the annual average. This surge was due to heightened curiosity about cryptocurrencies as their value reached an unprecedented peak (new all-time high).
Since then, a decrease in activity could potentially stem from Bitcoin’s underwhelming market performance, as many investors might find these periods of minimal price fluctuations unexciting.
The level of boredom can be seen in another aspect linked to Bitcoin trading as well – the Total Transaction Volume for Centralized Exchanges Inflow and Outflow. This term refers to a measurement that calculates the overall Bitcoin volume moving in and out of the digital wallets tied to centralized exchange platforms.
The graph indicates that Bitcoin’s total inflow and outflow through exchanges has recently mirrored the pattern of its transfer volume. Moreover, the point at which these two moving averages intersect (crossover) is currently more advanced in this metric. Specifically, the 30-day moving average now sits noticeably below the 365-day moving average.
The report indicates a reduction in investor interest for investment, along with fewer trades made by speculators, as the current price level does not seem appealing to them.
BTC Price
Initially today, Bitcoin dropped close to $55,500, but this fall didn’t last long; soon afterward, the cryptocurrency recovered and rose to around $56,700.
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2024-09-12 09:42