According to a recent bitcoin analysis by CryptoQuant, the trading volume of BTC has reached its lowest point since 2018, according to Forbes. The South Korean-based fintech company, which provides analyses among other services related to cryptocurrencies, reported that on August 25, a total of 129,307 BTC changed hands on crypto exchanges. Earlier in the month, this number had dropped to 112,317 BTC, marking a low not seen since 2018.
What has changed to #Bitcoin in the past 1 year?
1. US based Centralized Exchanges’ reserves continue to decrease.
2. The outflow amount hints the possibility of institutions’ accumulation.
3. The recent price action has been driven by the futures market.
— CryptoQuant.com (@cryptoquant_com) August 28, 2023
Julio Moreno, the head of research at CryptoQuant, stated in an interview with CNBC that trading volume decreases in bear markets as retail investors exit, which has already happened on most exchanges in 2022. Moreover, as we move into a bull market, trading volumes are expected to increase.
Despite all this, there is room for optimism, as the decreased volume did not correspond with a rapid decline in value; in fact, the value of Bitcoin has risen by just over 50% in 2023. One reason for the slowdown could be the increased regulatory scrutiny focused on cryptocurrencies and exchanges. The regional banking crisis in May and the recent legal actions by the United States Securities and Exchange Commission (SEC)—especially the lawsuit against Coinbase Global Inc—have also kept investors away from the market.
Following the cryptocurrency’s largest one-day drop since the FTX scandal on August 17, the market has been relatively quiet. Speculations from analysts at JPMorgan provide reasons for optimism, as they believe the decline may soon come to an end. Based on data from the Chicago Mercantile Exchange, the open interest in Bitcoin futures contracts has decreased to $26,105, suggesting that the majority of long positions have already been liquidated.