Amidst a climate of macroeconomic uncertainty, Bitcoin (BTC) exchanges have seen a significant decrease in trading volume. This decline has been observed over the past few months, with daily BTC volumes reaching lows not seen since 2018, according to research published by on-chain analytics platform CryptoQuant on September 25, 2023.
The analysis highlighted that daily BTC spot exchange transactions ranged between 8,000 and 15,000 in the past week, a stark contrast to the average March daily tally, which exceeded 600,000. The drop in volume coincides with Bitcoin price action remaining within a familiar range for several months.
Contributing analyst at CryptoQuant, Caue Oliveira, attributed the decline in trading volumes to the prevailing macroeconomic climate. He noted that actions by the United States Central Bank have perpetuated a constant feeling of uncertainty, leading investors to anticipate a possible recession. The Federal Reserve's inconsistent stance on interest rate hikes and pauses throughout 2023 has contributed to this sentiment.
Despite the dwindling trading volumes, Bitcoin holders appear to be holding onto their investments. Rather than seeking quick profits through short-term trading, more investors are viewing Bitcoin and other cryptocurrencies as long-term investments. Oliveira stated that these investors are more interested in holding their coins, believing in their future value, rather than selling at the first sign of profit.
This trend is supported by data from IntoTheBlock disclosed on September 24, 2023. The crypto analytics platform reported that long-term Bitcoin holders continue to hold their assets despite market turbulence. By IntoTheBlock's definition, long-term holders refer to investors and entities who bought their coins at least a year ago. Currently, these long-term "hodlers" hold 13.44 million BTC, accounting for 69% of Bitcoin’s circulating supply.
The decline in trading volumes and the shift towards long-term holding come at a time when Bitcoin price is trending toward the $26,000 mark. Despite this, short-term holders currently hold almost their funds at an unrealized loss, with their cost basis higher than the current spot price.
As a result of these factors, interest in Bitcoin has also declined. Google (NASDAQ:GOOGL) Trends data shows the lowest interest in "Bitcoin" as a search term since October 2020. This data suggests that external interest in BTC exposure remains low amidst the current economic uncertainty and market conditions.
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