Panic or Patience? Crypto Trading Volume Plummets as Prices Struggle

Crypto Trading Volume Plummets: Traders Losing Interest as Market Sentiment Sour

According to researchers, indicators of trader fatigue and possibly weakened market momentum include declining digital asset prices and crypto trading volumes. Due to dip-buying chances, the volume of trade in the cryptocurrency space has been declining since its peak in February.

The daily trade volume surpassed $440 billion in early February, the highest level this year, according to CoinGecko data. On March 12, it dropped 63% to $163 billion. Santiment, an analytics firm, stated on X on March 13 that this volume drop indicates that traders’ interest in the asset class is waning. After more market capitalization drops over the previous two weeks, Santiment continued, and trader conduct showed a combination of fatigue, despair, and surrender.

When trading volume for major cryptocurrencies consistently drops, even during slight price recoveries, it typically points toward diminishing trader enthusiasm.

Santiment

Crypto Crash Deepens: Santiment Warns of Potential Further Declines

As the crypto market downturn intensifies, the total market capitalization has shrunk by $900 billion, almost 25%, since the beginning of February. These drops have accelerated during the last ten days, when markets have dropped 15% as concerns about a US recession have grown in tandem with rising trade tensions worldwide. Santiment claimed that traders are growing wary, implying that they may not think the present higher price trends will continue.

Essentially, reduced trading activity reflects uncertainty, as fewer traders are convinced that buying at current levels will yield profitable outcomes,

Santiment

According to Santiment, declining trading volume with little price increases may be an early indicator of waning market momentum. Additionally, it notes that price gains can swiftly stall in the absence of strong buying activity because there isn’t enough underlying support to keep the trend rising. It said that volume is a metric that gauges activity from both retail and institutional traders and that it must begin to rise before prices do. So, declining volume during a slight recovery isn’t always a clear bearish indication.

This leads to the possibility that any rebound could be temporary, with prices vulnerable to another downturn.

Santiment

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