Trading volumes for bitcoin have fallen to their lowest point this year, roughly matching those of summer 2020. The weekly average of $3 billion in July is almost the same as the volume in mid-December 2020. Summer is one of the reasons for the market’s low activity, according to two crypto specialists.
Bitcoin’s trading volume has plummeted in the last three months, and weekly volatility has decreased even more this week.
The seven-day volatility has dropped to 1.68 percent, down from above 5% in February 2021. According to crypto exchange Luno, which cited statistics from Arcane Research, this is the lowest figure since October 2020 and on par with levels seen this summer.
Trading volumes remain surprisingly low, with the weekly average averaging about $3 billion, as shown in the graph below. This is down from a mid-May seven-day average of over $16 billion. The level has remained unchanged since mid-December 2020.
Money managers may be de-risking their portfolios as a result of recent market declines, as well as macroeconomic worries over the impact of COVID-19, according to Sam Kopelman, Luno’s UK national manager.
Other analysts, however, believe that the summer doldrums, which are commonly linked with low volumes and bad market performance, are to blame for bitcoin trading volumes plummeting to their lowest point this year.
At the start of this week, Bitcoin’s price fell below $30,000, continuing its slide as fears about China’s crypto crackdown grew and regulatory scrutiny increased.
“We’re seeing the signs of an undecided market,” Nick Jones, CEO and co-founder of Scottish crypto wallet Zumo, told Insider. “There’s an element of ‘sell in May and go away,’ where the summer holiday months bring a reduction in market participants. And, for retail investors, no doubt some lingering fear after the bitcoin price crashes of April and May.”
As of Friday, Bitcoin was selling at around $32,390, down 50% from its peak of over $64,000 in mid-April.