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Bitcoin transaction volume plummets to 2023 lows – Bearish trend ahead?
Bitcoin’s transaction volume has dropped sharply, reaching levels not seen since early 2023, sparking concerns about the market’s strength. The decline in transaction activity comes at a critical juncture as BTC faces increasing resistance near the $86,000 mark.
A significant drop in Bitcoin transactions sparks concern
Recent data from Glassnode reveals a stark contrast to previous highs, with daily transactions plummeting below 400,000. This substantial decrease suggests reduced network activity and potentially fewer market participants. Historically, such drops in transaction count have often preceded periods of price stagnation or corrections.
Source: Glassnode
The reduction in transaction volume implies that the market may struggle to maintain its current price levels if this trend continues. A lack of demand could weaken support zones and pave the way for a correction.
Open Interest and trading volume confirm weakening momentum
A broader analysis of market indicators further solidifies the bearish sentiment. According to CryptoQuant, Bitcoin’s Open Interest has also declined significantly, currently standing at $86.2 billion from highs above $100 billion earlier in the year. Although OI has increased recently, this comparison suggests traders are reducing their leveraged positions.
Source: CryptoQuant
This trend could lead to lower volatility and diminished speculative buying appetite.
Moreover, Bitcoin’s trading volume tracked by Santiment has also seen a notable decline. The current volume of 36.31 billion is significantly lower than the February highs.
The reduced volume confirms that fewer traders are actively engaging with BTC at its current price, increasing the likelihood of a downward move if buyers fail to step in.
Key levels to watch
As of writing, Bitcoin was trading around $85,856, facing resistance at $86,877. The 50-day Moving Average stood at $85,873, serving as a crucial pivot point. Failure to hold above this level may send BTC back towards support at $80,000.
Conversely, if the price breaks past $87,500, it could challenge the psychologically significant barrier of $90,000.
While a breakdown is not yet confirmed, traders should closely monitor transaction volume and Open Interest for further signs of deterioration. Bitcoin may be on the verge of entering a prolonged consolidation phase or even a bearish correction in the coming weeks if network activity fails to recover.
Source: https://ambcrypto.com/bitcoin-transaction-volume-plummets-to-2023-lows-bearish-trend-ahead/
