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Crypto
Bitcoin Gained 55% in 2023, But Trading Volume Remains at 4-Year Low
Bitcoin trading volume hit a 4-year low earlier in August as traders struggle to find reason to reenter the market.
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Bitcoin (BTC) trading volumes on all exchanges tumbled to a four-year low on August 12, underscoring the ongoing slowdown in the market and the lack of price catalysts. Still, despite sluggish trading activity, BTC is trading 55% higher in 2023, outdoing most major assets.
Bitcoin Trading Volume Down 94% from March Highs
Although it has staged an impressive comeback from its 2022 lows this year, Bitcoin is witnessing a significant dip in trading volume amid rising market uncertainty. Notably, the total volume of BTC held on all spot and derivative exchanges declined earlier in the month to the lowest level since 2018, on-chain data showed on Tuesday.
To be more specific, as of August 26, Bitcoin trading volume on all crypto exchanges stood at 129,307, marking a slight recovery after sliding to 112,317 – the lowest since November 10, 2018. Currently, BTC trading volume is roughly 94% short of the 3.5 million high reached in March.
“Trading volumes decrease in bear markets as retail investors leave. This happened during 2022 on most exchanges. As we progress further into a bull market, the trading volume may continue to pick up.”
– CryptoQuant’s head of research Julio Moreno told CNBC.
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SEC to Announce Decision on Several Spot Bitcoin ETF Applications
The dip in trading volumes comes amid a tranquil summer for crypto investors, although the seasonal change only accounts for a portion of diminished market activity. Other factors, such as the US regulatory crackdown on the industry, the end of the banking crisis, and macroeconomic challenges, have added to the uncertainty, giving traders and market makers no strong reason to jump back in.
Bitcoin and the rest of the crypto market received a significant boost in mid-June when BlackRock, along with other major traditional finance (TradFi) institutions on Wall Street, filed applications to launch spot bitcoin exchange-traded funds (ETFs). The decision on one of those applications, filed by Cathie Wood’s ARK Invest, has been delayed by the SEC earlier this month.
The securities regulator is expected to announce its decision on several other spot Bitcoin ETF applications this week before Labor Day weekend. However, analysts and industry participants anticipate the SEC postponing the ruling again.
Meanwhile, despite its sharp drop in trading volumes, Bitcoin’s price remains up by more than 55% in 2023, outperforming other major cryptocurrencies such as ETH, XRP, BNB, and ADA.
Would Bitcoin trading volumes diminish further if the SEC delays its spot ETF decision again? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
