Bitcoin has long been the benchmark for cryptocurrencies, guiding sentiment and market dynamics. But recent metrics reveal a disturbing trend. In fact, the pioneering digital currency seems to be losing its appeal.
Analysis of market data, search trends, buying and selling volumes, and investor behavior reveals a disturbing pattern of declining interest.
Bitcoin Investing Volumes Plummet
One of the first alarming metrics to suggest declining interest in Bitcoin is buying and selling volume. According to data from CoinGecko, Bitcoin place investing volumes for the true quarter total $721.10 billion. It is worth noting that Bitcoin buying and selling volumes in the second quarter of this year reached $1.25 trillion, which is a potential drop of 14% month-on-month.
If this trend continues through September, quarterly trading volumes could drop to a level not seen since the first quarter of 2019. Similarly, Ethereum trails Bitcoin, with trading volumes for July and August recording $232.06 billion and $212.92 billion, respectively.
Continuing this trend would push Ethereum’s quarterly trading volume to just over $650 billion, another low point very similar to 2019 levels.
Decrease in Google Search Traffic
Even so, the significant drop in Bitcoin and Ethereum buying and selling volumes is just the tip of the iceberg. Google Traits adds another layer of concern. Organic search traffic for the keywords “cryptocurrency” and “Bitcoin” has returned to levels not seen since 2019.
“This is exactly what apathy looks like,” said Will Clemente, Co-founder of Reflexity Exploration. Although Bitcoin search traffic has been somewhat stable, the downward trend for the broader term points to less public interest. This can be considered a clear influence on investor sentiment.
Some say that the popularity of top industry search queries to the keyword “Uranus” to highlight waning interest. There are more people looking for the planet Uranus than Ripple, despite the recent court decision in the lawsuit against the United States Securities and Exchange Commission (SEC).
Low Volatility and Investor Sentiment
Most alarmingly, the volatility metrics for Bitcoin, historically known for its price swings, remain low. In a recent report, cryptocurrency exchange Bitfinex highlighted that the delta between implied and historical volatility is only 1.3%, indicating market expectations of sustained low volatility.
The low volatility environment is further emphasized by Bitcoin’s velocity, a metric that acts as a barometer of market activity. Bitcoin’s velocity drop indicates lukewarm participation among market players. Therefore, it suggests a period of cautious hesitation or consolidation in the crypto industry.
The market is also seeing a cooldown. Despite above-average investing volumes of $2.8 billion over the past week, capital outflows, which have totaled $342 million over the past seven weeks, minimize negative sentiment.
Implications: Future Prospects for Bitcoin
Institutional firms such as Genesis Buying and selling predict that future buying and selling volume growth will likely depend on derivatives, citing:
“Spot market liquidity suffering and chronically declining spot order book depth.”
This is not a surprise, given the decline in trading volumes and investor interest. With cryptocurrency investment product flows cooling, coupled with declining trading volumes and falling search interest, it is clear that Bitcoin is going through a period of uncertainty.
While Bitcoin may not have completely lost its luster, these indicators cannot be ignored. Investors would be wise to brace for more bearish or sideways moves until a compelling reason for a market rally materializes.
Only time will tell, in light of these metrics, whether Bitcoin will return to its former glory or continue to fade into an eerie lull.
By Leonardo Pérez
