According to some analysts, the bitcoin trading market has come to a bit of a halt during these past two months.
Bitcoin Trading Has Fallen
Spot volumes have gradually dwindled throughout the month of June, now representing roughly half of the daily volumes seen in the previous month. Crypto derivatives exchanges experienced a 35.7 percent drop in volume.
Trading through the world’s largest crypto exchanges dropped by close to 40 percent in the month of June. The big question is, “What the heck happened?” After all, this was just a month or so after many analysts were of the sentiment that bitcoin and crypto trading had reached pinnacles thanks, in part, to the spreading coronavirus pandemic.
Many were of the belief that thanks to the release of stimulus checks and other financial means meant to pump money back into the economy and fight the effects of the virus, inflation and other economic problems could potentially occur due to the U.S. government simply printing money out of thin air. As a result, allegedly many people saw bitcoin and crypto in a whole new light – as tools to potentially hedge their wealth against economic downfalls, protect their money and keep their portfolios stable.
But now, the idea seems to have reversed itself. With evidence that trading has gone down significantly, one wonders how much of the initial positive sentiment was true. Many analysts are now fearful that a crypto winter is upon us, similar with the conditions we were met with in late 2018.
Charles Hayter of Crypto Compare says that this isn’t necessarily a bad thing, but that with times being what they are, trading has fallen and hodling has become a more practical decision. He states:
People are hunkering down and ‘hodling’ [an industry term for holding onto crypto assets]. Frictions between fiat and crypto are decreasing, and you have a form of Gresham’s Law where the asset that cannot be diluted becomes the haven of choice. This can be seen in the data and in the number of products appearing globally allowing traditional market money exposure to this asset class through exchange-traded products.
Others feel that trading has been put off until bitcoin chooses to reach the five-figure range again. While it has happened a few times this year already, the breaches of the $10,000 mark have been relatively brief, with one in early June occurring for only mere hours.
The Currency Needs to Hit $10K
Alex Kuptsikevich – a financial analyst at FxPro – stated:
Bitcoin’s sideways price trend has already gone on for too long. The situation is now reminiscent of the months before November 2018, when an extended period of feeble dynamics turned into a collapse to the lowest level seen during the crypto winter.