Bitcoin Trading Interest Is Losing Steam, Report Reveals

A report from Glassnode has revealed that the Bitcoin transfer volume has been losing momentum recently, a sign that may not be positive for BTC.

Bitcoin Transaction Volume & Exchange Volume Are Both Down

According to the latest weekly report from Glassnode, the Entity-Adjusted Transfer Volume has declined recently. The “Transfer Volume” is a metric that keeps track of the total amount of Bitcoin volume becoming involved in blockchain transactions.

The Entity-Adjusted version of this indicator filters the total volume to represent only the transfers between different entities. An “entity” here refers to a cluster of addresses that Glassnode has determined to belong to the same investor through its analysis.

Transactions between the wallets of the same holder aren’t relevant to the greater market, so the Entity-Adjusted version, which filters out such transfers, can represent the true volume becoming involved in trading.

Below is the chart cited by the analytics firm in the report, which shows the trend in the Entity-Adjusted Volume and its 30-day and 365-day moving averages (MAs) over the past few years.

Looks like the 30-day MA of the metric has been on the way down in recent days | Source: Glassnode's The Week Onchain - Week 37, 2024

As displayed in the graph, the Bitcoin Entity-Adjusted Transfer Volume currently has a value of around $6.2 billion daily. This isn’t a low value, but what may be worth noting is the trajectory that the indicator has been following recently.

From the 30-day MA, it’s visible that the network volume has been declining for a while now, with it even just dropping under the 365-day MA recently. “Generally speaking, this is a net negative observation,” notes Glassnode.

Earlier in the year, the monthly average volume had gained a large distance over the yearly average, caused by the spike in interest surrounding the cryptocurrency as its price had marched on to a new all-time high (ATH).

The decline in the volume that has followed since then may be due to the lackluster price action that Bitcoin has been showing, as investors tend to find such periods boring.

This boredom is also visible through another indicator related to BTC trading: the Combined Exchange Inflow/Outflow Volume. As its name implies, this metric measures the total amount of Bitcoin flowing in and out of the wallets associated with centralized exchanges.

The trend in the the Exchange Volume Momentum for BTC over the last few years | Source: Glassnode's The Week Onchain - Week 37, 2024

The graph shows that Bitcoin’s combined exchange inflow/outflow volume has recently seen a similar trend to the transfer volume. The crossover is even at a more advanced stage in the case of this metric, with the 30-day MA now being well below the 365-day MA.

“This underscores a decline in investor demand and less trading by speculators within the current price range,” reads the report.

BTC Price

Bitcoin had seen a plunge towards $55,500 earlier in the day, but the decline was only short-lived as the coin has bounced back to $56,700.

The price of the coin seems to have gone up over the last few days | Source: BTCUSDT on TradingView

Featured image from Dall-E, Glassnode.com, chart from TradingView.com