It’s not just digital asset prices that are hitting new highs over the past weeks. Trading volumes for cryptocurrencies are through the roof as well. Trading volume represents the total number of cryptocurrencies traded (bought and sold) during a given period of time. As a technical indicator, it shows the overall activity, including liquidity of the market.
Much of it , as seen in the small size of transactions, is being driven by retail traders and speculators who are continuing the high level of engagement that began since early 2021, and new entrants who may be looking to jump in and ride the explosive uptrend seen in some of the cryptocurrencies recently.
Most of the major digital coins have further appreciated over the past week although it’s not clear if that trend is sustainable, particularly since the markets have continued to move into record territory.
The increased trading volume in the market also shows itself in the price action observed in cryptocurrencies, this is especially the case on the weekends as we see record volumes every weekend since mid-April.
Further consolidating in the US $55,000-US $57,000 range, this morning Bitcoin (BTC) has managed to climb above US $59,000 level after the recent pullback. It has seen steady gains over the last few days, formed solid base around this territory and is likely going to bump against the massive psychological resistance of US $60,000 soon.
Succeeding to hold constructively above US $60,000 could validate bullish potential and precipitate an impulsive surge to challenge the yearly high of near US $65,000.
Meanwhile, Ethereum (ETH), the second-largest cryptocurrency by market cap, has pushed towards the US $4,000 level, currently holding steady around US $3,890. Overall, it has been a remarkable week for ether, and it is poised to top US $4,000 mark on Monday if not today.
Elsewhere, many of the major altcoins have been steady although some small-cap coins made double-digit percentage points to set new records overnight.
However, altcoins in Top-10 are not going up that well and have drifted slightly down overnight. Interestingly, they usually see low activity and price fall each time ether spikes, probably due to their touted ether-killer features. It is possible investors think they will lose their appeal further if ether further solidifies its market position.
As of press time, Bitcoin (BTC) is changing virtual hands at US $59,100, Ether (ETH) at US $3,889, ripple (XRP) at US $1.61, Binance Coin (BNB) US $644, cardano (ADA) at US $1.61, Dogecoin (DOGE) at US $0.63, ChainLink (Link) at US $48.5, UniSwap (UNI) at US $40.63, Polkadot (DOT) at US $40 and Stellar (XML) at US $0.61.
The parabolic surge in the market is mostly fuelled by the fact that many traders, especially newcomers do not want to miss out on any buzz that stems from the kinetic momentum and hype, especially Elon Musk’s upcoming host event which has propelled Doge up, Ethereum’s recent appreciation, and overall investor confidence bolstered by speculative buy calls.
However, such artificially inflated prices can easily leave a lot of newbie investors hemorrhaging losses if they wade into the risky assets imprudently.
Just three weeks ago, cryptocurrency holders were fumed as a sudden constellation of risk events triggered the forced liquidation of leveraged bets, wave of selling with pressure across the board. The flash crash made many investors cautious to buy into an ongoing crash, reducing bid liquidity in the market.
The vicious sell-off was indeed a costly lesson for the rookies who have been stuffing their wallets with ‘upside momentum’ crypto coins with a false sense of security, thinking their holdings could only climb.
Both Bank of England and Reserve Bank of Australia think crypto coins don’t have any intrinsic or legislated value and could fall to zero at any time.