On-chain data shows that Bitcoin transfer volume from retail investors has seen a sharp decline recently, a sign that this group may be losing interest.
Bitcoin volume for retail transactions has plummeted recently
As explained by CrypoQuant author Axel Adler Jr in a new publish in X, the total BTC transfer volume for transactions valued between $1,000 and $10,000 has recently dropped.
O “transfer volume” here refers to the total amount of Bitcoin (in US dollars) that addresses on the network move daily. This metric should not be confused with “trading volume”, which typically only tracks the volume involved in trading on spot exchanges.
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When the transfer volume value is high, it means that users are moving large amounts on the blockchain at this time. Such a trend implies that investors are actively interested in trading the asset.
On the other hand, the low metric suggests that holders may not pay attention to the cryptocurrency as they do not participate in much activity on the network.
Now, here is a chart showing the trend in Bitcoin transfer volume from the 30-day moving average (MA) specifically for transactions involving the movement of coins worth at least $1,000 and at most $10,000:
As shown in the chart above, Bitcoin transfer volume for transactions of this size reached relatively high levels during the bull run earlier in the year.
Transfers of $1,000 to $10,000 are considered relatively small, so their volume would reflect the activity level of the smallest investor in the market: retail.
The increase in this metric compared to the beginning of the year suggests that the price increase has sparked interest in the asset among these investors. The chart shows that a similar trend was also observed during the previous period bull run.
Strong price action is generally encouraging for retail investors, so it is not surprising that they tend to become more active during rallies. This growing interest is what makes any increase sustainable over long periods. As such, only rallies that can attract retail interest will be allowed to last.
As the chart shows, Bitcoin transfer volume for retail movements peaked in May and has since seen a sharp 30% drop. This would mean that the downward price action caused these investors to disappear.
Interestingly, the bearish trend in the indicator persisted even when Bitcoin rebounded above $70,000 a few weeks ago, which could have been a potential harbinger that this rally would never last.
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With 30-day retail transfer volume fluctuating at the same lows recorded during the July 2021 trough, any further attempts at recovery could also be doomed to failure unless the indicator shows a recovery.
BTC Price
At the time of writing, Bitcoin is trading around $62,200, down more than 4% over the past week.
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com