Bitcoin and altcoins are seeing a collapse in volume

On-chain data shows that cryptocurrency traders have hit the hold button as Bitcoin and other assets saw a decline in volume.

Bitcoin and altcoins have seen a collapse in trading volume recently

According to data from the on-chain analytics company SantimentTrading volume has seen a slowdown in the cryptocurrency sector over the past week.

the “Trading volumeHere it refers to an index that tracks the total amount of a particular asset involved in trading activities on major exchanges. When the value of this measure rises, it means that investors are participating in a greater amount of activity related to the currency. Such a trend means that interest in the asset is on the rise.

On the other hand, an indicator that observes a decline indicates that traders have begun to direct their attention elsewhere where they are engaging in less activity.

Now, here’s a chart showing the trend in combined Bitcoin trading volume for four different sectors of the digital asset sector:

The value of the metric appears to have gone through a decline for all of these groups | Source: Santiment on X

In the chart above, the four aspects or sectors of the cryptocurrency market shown are: Memecoins Top 6, AI & Big Data Top 6, Layer 1 Top 6, and Layer 2 Top 6.

“Layer 1” assets refer to those that are traded on blockchains that handle their own security and are not built on another ecosystem. Bitcoin and Ethereum are the most prominent examples of coins of this type. Coins that are not on the main networks, such as Polygon (MATIC) and Arbitrum (ARB), are called layer 2 coins.

It is clear from the chart that the top six coins of both categories have seen a sharp decline in their trading volume recently. Sectors such as meme-based tokens and AI-related currencies also noticed their own slowdowns at the same time.

Back in November and the first half of December, trading volume was high across the market as traders made a large number of moves during the Bitcoin hype. However, the recent downward shift appears to have hurt investor sentiment.

After the recent index continued to decline, trading activity in the market fell to the lowest level since November 4, one day before Presidential elections In the United States.

In general, the market tends to see volatility when a large number of traders are involved in trading activity, as it is their trades that fuel the price movements. Given the recent decline in trading volume across the cryptocurrency sector, Bitcoin and others will likely see a lull in the near future.

Low activity can even be considered a sign of this FUD in the market, which has facilitated the formation of bottoms in the past.

Bitcoin price

At the time of writing, Bitcoin is trading at around $90,700, down about 8% in the past week.

Looks like the price of the coin has been going down over the past day | Source: BTCUSDT on TradingView

Featured image from Dall-E, Santiment.net, chart from TradingView.com