The waters in the Bitcoin front remain unsettled. Investors are now facing macroeconomic uncertainties and confusion following last week’s announcement of the Fed’s decision. Meanwhile, trading volumes on cryptocurrency exchanges continue to decline. According to a new study published by on-chain data analysis platform CryptoQuant on September 25, daily Bitcoin trading volumes have reached their lowest levels since 2018.
The Bitcoin price movement is experiencing the lowest levels of volatility in recent times. This has caused many investors to lose interest in trading. Data from CryptoQuant, which monitors exchange activities in both the spot and futures markets, highlights how volume declines in the BTC/USD pair have decreased since March.
According to the research, spot Bitcoin trades ranged from 8,000 to 15,000 daily last week. In March, this number exceeded 600,000 daily, indicating that individual investors are now giving up. Analyst Caue Oliveira, who contributed to the study, believes that the main reason for this is the confusion in macroeconomic data. The renowned analyst stated the following:
“One of the main reasons is the increasing fear related to the macroeconomic scenario. The actions of the United States Federal Reserve constantly create a sense of uncertainty, leading investors to expect a possible recession.”
Oliveira discussed the current economic policy in the United States, where the Federal Reserve keeps the overall market process tight while fluctuating between interest rate increases and pauses in 2023. According to the analyst, Bitcoin holders have chosen to hold onto their assets in this environment of fear and concern:
“Instead of making quick profits through short-term trades, more and more people see Bitcoin and other cryptocurrencies as long-term investments. They are more interested in holding onto their assets, believing in their future value, rather than selling at the first sign of profit.”
In recent weeks, market conditions have been increasingly challenging for Bitcoin speculators. Especially, futures traders or spot investors who hold their BTC for up to 155 days are now holding onto their funds at a loss, with their investment costs higher than the spot price.
In a research article shared by CryptoQuant team member Yonsei_dent this week, it was stated that the investment costs for new Bitcoin owners act as a “strong resistance”:
“I believe that investors who have held their assets for more than 1.5 years and those who entered the market last year have a stronger tendency to engage in short-term trading.”
The chart below shows the support and resistance levels derived by dividing investors’ costs and the time they hold their assets. In addition to all these developments, interest in Bitcoin has reached its lowest levels since October 2020, according to Google Trends data, which is one of the most closely followed data in the market.