Bitcoin’s trading volume sank to its lowest point in nearly five years, according to a new analysis of CryptoQuant data.
On Friday, the volume of Bitcoin held on all exchanges was a combined 129,307 BTC, according to CryptoQuant. Earlier this month, that fell as low as 112,317, the lowest level since November 2018.
“Trading volumes decrease in bear markets as retail investors leave,” Julio Moreno, head of research at CryptoQuant, said in an interview with CNBC. “This happened during 2022 on most exchanges. As we progress further into a bull market, the trading volume may continue to pick up.”
However, the depressed volume hasn’t meant a rapidly sinking value. Bitcoin is up more than 50% thus far in 2023, albeit down 0.4% Monday to $25,995.07.
Part of the reason for the slowdown is increased regulatory scrutiny on cryptocurrencies and exchanges in recent months.
The regional banking collapse in May drove investors from the market, as did the US Securities and Exchange Commission's move to hit Coinbase Global Inc (NASDAQ:COIN) with a lawsuit on charges of securities law violations.
Then, August 17 brought the worst one-day drop for Bitcoin since the FTX debacle in November, but, since then, things have been relatively quiet.
Looking forward, analysts at JPMorgan believe the cryptocurrency market's recent decline may be nearing its end. Analysts from the US bank suggest that the majority of long position liquidations have already occurred, based on data from the Chicago Mercantile Exchange, where open interest in Bitcoin futures contracts has decreased to $26,105.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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