On-chain data shows that cryptocurrency traders hit the snooze button as Bitcoin and other assets saw a drop in volume.
Bitcoin and Altcoins have recently seen a drop in trading volume
According to data from on-chain analytics firm Santiment, trading volume has seen a slowdown in the cryptocurrency sector over the past week.
“Trading volume” here refers to an indicator that tracks the total amount of a given asset that is involved in trading activities on major exchanges. When the value of this metric increases, it means that investors are participating in more activity related to the coin. Such a trend implies that interest in the asset is on the rise.
On the other hand, the indicator observing a decline suggests that traders might start to turn their attention elsewhere as they participate in less activity.
Now here is a chart that shows the trend in combined Bitcoin trading volume for four different segments of the digital asset industry:
The value of the metric appears to have gone through a decline for all of these groups | Source: Santiment on X
In the chart above, the four sides or segments of the cryptocurrency market displayed are: Memecoins Top 6, AI & Big Data Top 6, Layer 1 Top 6, and Layer 2 Top 6.
“Layer 1” assets refer to those that circulate on blockchains that manage their own security and are not built on top of another ecosystem. Bitcoin and Ethereum are the most prominent examples of coins of this type. Coins that are not on the main networks, like Polygon (MATIC) and Arbitrum (ARB), are called layer 2.
It can be seen from the chart that the six largest coins in these two categories have recently experienced a sharp decline in their trading volume. Segments such as meme-based tokens and AI-related coins have also noted their own cooldowns at the same time.
In November and the first half of December, volume was high across the market as traders made a large number of moves during the Bitcoin bullish hype. However, it seems that the recent downward trend has harmed investor morale.
After the latest continuation of the decline in the indicator, trading activity on the market fell to its lowest level since November 4, a day before the presidential elections in the United States.
In general, the market tends to experience volatility when a large number of traders participate in trading activities, as it is their transactions that fuel price fluctuations. Given that trading volume has recently fallen in the cryptocurrency sector, it is possible that Bitcoin and others will experience a state of calm in the near future.
Low activity can even be seen as a sign of the presence of FUD in the market, which has facilitated dips in the past.
BTC Price
At the time of writing, Bitcoin is trading at around $90,700, down almost 8% in the past week.
Looks like the price of the coin has been going down over the past day | Source: BTCUSDT on TradingView
Featured image of Dall-E, Santiment.net, chart from TradingView.com
