Although bitcoin broke out to a three-month high over $50,000 on Sunday, trading volume hasn’t picked up, according to Arcane Research.
The seven-day average real BTC trading volume is still around $5 billion, less than half of what the market witnessed the last time bitcoin was at $50,000, Arcane Research analysts wrote Tuesday in a report.
If trading volume continues to be relatively flat and bitcoin prices push higher, the market could become exhausted and the rally won’t be sustainable, the analysts said.
“We have not seen the desired spike in volume with this latest move higher for the bitcoin price, which could indicate that we’re not ready for $50,000 just yet,” the report stated.
“This means there’s not a lot of interest from traders to get engaged,” said Patrick Heusser, head of trading at Crypto Finance. “This is typical range-trading behavior.
“Either we break out of the range or some news will be the catalyst for a larger move,” he said.
Matthew Blom, global head of trading at digital-asset firm Eqonex, said that “as lovely, timely and wonderful as this rally has been, the headwinds of the Fed, $50,000, and the muted effect of PayPal announcing their entrance into the U.K. market, could put it on ice.”
Bitcoin blockchain activity also has remained anemic as the bitcoin price recovered, Arcane Research analysts noted, saying that “the number of active addresses is still far from the top levels seen during the hype of early 2021.”
That’s despite signs that market sentiment has climbed along with the price: “Extreme greed is back, the fear is gone for now, and the market is optimistic,” Arcane Research analysts wrote. In July, the index was registering a reading of “extreme fear.”
Source: Coindesk
