Cryptocurrency prices were little changed Thursday, as bitcoin maintained a firm grip on an important psychological threshold that many say could pave the way for an eventual bounce. However, perpetually low trading volumes stand in the way of the anticipated rally, with daily turnover approaching its lowest level in over two months.
Crypto assets have been treading water for the past 24 hours, with neither the bulls nor the bears preparing to commit. In terms of overall market cap, cryptocurrencies fluctuated between $245 billion and $250 billion with consolidation around the halfway point of that range.
At current values, the cryptocurrency market is on track for a monthly decline of $85 billion.
That being said, the market is showing signs of stabilizing. Case in point: bitcoin has successfully defended the $6,000 support all week despite offering few signs of a bullish reversal. Bitcoin briefly traded above $6,300 on Monday and has spent the remainder of that time capped below $6,200.
At press time, bitcoin was trading at $6,124.
As Fundstrat’s Robert Sluymer recently pointed out, BTC/USD needs a convincing rally back toward $6,400 to pave the way for a reversal. For the time being, the call on bitcoin is neutral, though a corrective rally is still possible if the digital currency can maintain current levels. Short-term traders are advised of a critical stop loss level between $5,800 and $6,000.
The sideways trading range can be observed for other major cryptocurrencies as well. In particular, Stellar XLM and Litecoin have held narrow ranges over the past 24 hours. IOTA has also given back gains after briefly overtaking Tether’s USDT as the world’s ninth largest cryptocurrency.
Cryptos have failed to break out amid declining trade volumes across all major assets. At press time, daily turnover was back below $10 billion, having declined more than 10% from yesterday’s levels. While volumes have held more or less steady over the past week, they’ve declined almost 40% compared to last month.
Weak trade volumes reflect the general decline in interest in cryptocurrency exhibited by retail investors and other laypeople who were previously drawn in by bitcoin’s eye-popping gains. Some analysts have concluded that the ‘retail downturn’ could take several years to fully revive. In the meantime, exchanges are looking to introduce custodial services as a way to lure institutional capital.
It’s also worth bearing in mind that exchanges have long been accused of inflating their trade volumes, which means the figures published by CoinMarketCap and others need to be looked at with a critical eye. Speculation is widespread that exchanges hire money makers who participate in both sides of a transaction, thereby inflating trade volumes. Other exchanges have employed a method called “transaction fee mining,” which effectively rewards users for trading more frequently.
Then there’s those who claim that the vast majority of trading volume on major exchanges like OKEx are fabricated. Researcher Sylvain Ribes did a fairly lengthy write-up on why 93% of OKEx trade volumes are non-existent.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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