A surge in Bitcoin trading volume and favourable on-chain statistics seem to be the key drivers of the cryptocurrency’s recent gain.
The beginning of 2023 has brought Bitcoin positive signals, and the surge to a yearly high of $21,647 has crypto traders optimistic that the worst of the bear market has passed. The surging impact of Bitcoin’s strong price movement extends to Ether and Bitcoin mining equities as well.
The neutralization of the Bitcoin Fear and Greed index may be attributable to volume growth, Bitcoin on-chain data, and BTC price separation from equity markets. Even while not all experts feel a market bottom has been reached, let’s examine the statistics.
The price increase of Bitcoin has been matched by an exponential increase in trade volume. The BTC volume has more than doubled in the last week, hitting $10.8 billion, an increase of 114%.
Typically, more trade activity corresponds with increased volatility. While the current seven-day volatility levels of 2.4% are still below the 2022 seven-day average of 3.1%, Bitcoin’s surge in 2023 has been constant.
Centralized exchanges (CEX) have struggled with low trading activity, which has resulted in decreased fees and layoffs. The boost in volume across all exchanges is expected to be greeted favourably.
Bitcoin on-chain realized profits are retesting the adjusted spent output profit ratio (aSOPR) figure of 1.0, which is seen by some experts as a critical resistance level. Historically, the aSOPR measure indicates a shift in the general market trajectory as trade volumes absorb profits.
When more traders are making a profit on BTC purchases without the price falling, market strength is shown.
On-chain analytics also indicate that Bitcoin’s possible comeback may be on the horizon. The greater the market’s capacity to absorb sell pressure without price capitulation is indicative of less market anxiety and a potential macro change.
Bitcoin is decoupling from stocks due to volatility, realized profits, and trading volume. According to Cointelegraph, Bitcoin’s price movement has historically been highly associated with U.S. stocks.
On January 17, the 30-day correlation between Bitcoin and the Nasdaq hit 0.29, the highest level since December 2021.
Senior Analyst at Arcane Research Vetle Lunde outlines the significance of decoupling to the Bitcoin market.
Bitcoin’s past connection may have resulted from institutional investors bundling BTC with other risk assets and significant growth firms, such as Tesla, having exposure.
As institutional investors and growing firms reduce their Bitcoin holdings, the link between Bitcoin and markets may decrease in the future.
Due to the resilience of high inflation, equity markets may continue to fluctuate, but Bitcoin’s divergence from the stock market might help BTC become an investment hedge. According to some experts, institutional investors may return to the market if Bitcoin becomes a hedge against stocks.
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