The average daily spot trading volume of Bitcoin fell to approximately $2.2 billion in July. This is the lowest since November 2023, K33 Research, a leading crypto analytics firm, said.
Traders are simply staying on the sidelines. This marks Bitcoin’s calmest trading month in almost three years.
Volume Is Drying Up Everywhere
K33’s head of research, Vetle Lunde, followed the seven-day average at $2.1 billion. This is 4% lower than last week.
The derivatives markets are equally placid. CME Bitcoin futures open interest is also at its lowest level since 2023, according to another report from FXStreet based on K33 data.
The same is true of perpetual futures. Open interest has settled around 300,000 BTC, with no significant positioning activity seen on either side.
This isn’t just a summer lull. Bitcoin’s 30-day trading volume is currently about 62% below the annual average, which is far from normal even in a slow trading period.
The price action has also been subdued. Bitcoin has been trading in a narrow range of $60,000 to $66,000 for much of July, but has been edging closer to $63,000 in the last week.
The reasons for the withdrawal of traders.The reasons behind the withdrawal of traders.
One of the main reasons is the Fed. The Federal Reserve’s rate decision is due today, with markets divided on whether it will maintain its current stance or raise rates by a quarter-point.
Such uncertainty can stifle trading activity. Investors prefer to wait for clarity rather than make a decision just before a big rate call.
ETF flows have added to the caution. BlackRock’s IBIT has been a roller coaster in the same month, with large inflows and outflows.
Exchange shutdowns are not helping either. This summer, BitMEX, BitMart and AscendEX have all announced winddowns, reducing the number of venues where trading even occurs.
What Low Volume Means For Bitcoin
Thin volume can be good or bad for price. When there are not many traders, sharp moves are easier to make because it requires less money to move the market.
The quiet stretch is viewed by some analysts as a setup, not a warning sign. Fidelity’s Jurrien Timmer has noted that Bitcoin may be forming a bottom before it makes its next big move.
K33 has been using the same terminology, saying that the slowdown is a normal summer trend and not a warning sign. The firm has experienced this before, as July is one of the least active months for trading cryptocurrencies.
The larger issue is what will happen after the Fed decision. If the meeting clears up the confusion on either side, trading volume may rebound rapidly as the money that was left on the table comes back in.
Bitcoin is in a state of limbo for now. This is one of the more volatile periods of the year, as low volume, a narrow price range, and a significant rate change all occurred in the same week.
That could be a breakout or another leg down, depending on today’s Fed announcement. Both should provide traders with the clarity they’ve been seeking since volume began to wane.
