Why is trading volume falling while bitcoin price is rising?


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Eve cost BTC reached an all-time high, but the coin was unable to maintain its peak values. At the same time, the November rally is surprisingly proceeding against the background of low bitcoin trading volume, which raises questions from analysts.

How does the rate strengthen if the activity of traders looks modest? Let’s try to find the answer to this question.

Our attention was also drawn to the dramatic increase in digital capital under the management of Grayscale. The giant’s trusts have accumulated over $ 60 billion in cryptocurrencies.

The approach of the leadership of Kazakhstan to the painful issue of regulating the activities of miners looks curious. Local officials fear an increase in clandestine and uncontrolled mining and are trying to convince citizens to act legally and pay taxes. And for this they hold meetings with representatives of the cryptoindustry.

Growth amid recession?

Yesterday, the price of bitcoin was close to $ 69,000, but soon the market dropped significantly due to a massive sale. Following BTC, altcoins also retreated. And today, at the start of the American session, Bitcoin was trading at around $ 65,270. The capitalization of the leading digital currency by the evening fell by 4.2% – to $ 1.231 trillion (according to CMC).

Analysts at Arcane Research focus on the growth of the asset value against the background of low trading volume. On spot exchanges, the number of transactions for the movement of coins has decreased, which indicates a weakening of network activity.

The graph provided by the researchers shows that the average daily volume of transactions with bitcoin over seven days fell by $ 0.4 billion – to $ 5.6 billion – compared to the previous week.

This is the fundamental difference between the current situation and the BTC race at the turn of 2020-2021. Then the rally was accompanied by high trade turnover. During the first months of 2021, the volume of transactions remained high. Now the price is going up against the background of a low number of transactions.

Analysts say the reason is the reduction in the number of sellers on the trading floors. Most likely, investors are waiting for an update of the highs – and in the near future. Probably, only after that we will see a large-scale profit taking and, as a result, a drop in the value of bitcoin.

IntoTheBlock data confirms Arcane Research’s findings: BTC’s stock balance has shrunk again. More than 59,000 bitcoins were withdrawn from trading floors in a month. And receipts were recorded only on October 25 and 29.

It is worth paying attention to the alarming signals. According to ViewBase, cryptocurrencies have started to flow again this week. In 24 hours, more than 1,325 BTC and 4,370 ETH were entered on the platforms for $ 79.482 million and $ 23.3578 million, respectively. That is why we are fixing the correction. Although it is not catastrophic.

Grayscale Retains Leadership

The largest institution that has invested in bitcoin and other cryptocurrencies remains the Grayscale fund. From time to time, the company builds up capital accumulated in crypto trusts. The giant released an update on Wednesday showing Grayscale now controls $ 60.8 billion in digital assets.

Grayscale CEO Michael Sonnenschein said at a conference hosted by Yahoo Finance and Decrypt that approving an ETF crypto fund is a political matter. Discussion on this topic is ongoing in Congress. Most likely, the Grayscale CEO was referring to the spot bitcoin ETF, which has not yet been legalized by the US Securities and Exchange Commission (SEC).

At the same time, investors have access to an ETF on bitcoin futures through the Chicago Mercantile Exchange. The businessman talks about the need to launch a spot product, as he will provide institutional investors with direct access to bitcoin. The Grayscale BTC Trust now controls a cryptocurrency valued at $ 43.567 billion, followed by an Ethereum Trust with $ 14.852 billion in funds.

How Kazakhstan Solves the Problem of Underground Mining

Many countries face the practice of illegal mining of cryptocurrencies. Kazakhstan is no exception. The leadership of the republic fears the activation of underground miners and a sharp increase in the load on the state’s power grid, writes Reuters.

The government does not rule out that there are much more illegal miners in Kazakhstan than those who work legally, honestly pay for electricity and pay taxes to the budget. The total energy consumption of mining farms can reach 1.2 GW – about 8% of the total generation of power plants in the country.

Deputy Minister of Energy of Kazakhstan Murat Zherebekov, at a meeting dedicated to this problem, announced measures to combat underground miners. The state threatens with sanctions those who illegally use electricity and do not pay taxes.

However, the official did not specify exactly how the authorities and power engineers will identify violators of the new regime.

Back in the summer, the country’s President Kassym-Jomart Tokayev signed a law on mining. From 2022, this document sets an additional fee for the miners of digital assets for the use of the energy infrastructure of Kazakhstan. It will be $ 0.00233 per kWh.

Sources: Cointelegraph, Reuters, deCrypt, Grayscale, ViewBase, Arcane Research, Bitcoinist

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