Bitcoin Spot volumes are set annually high as BTC becomes volatile
Data shows that Bitcoin spot trading volumes have hit a new annual high in the past week as the price of the cryptocurrency has taken a volatile turn.
Bitcoin Spot trading volume has reached a new high for 2023
According to the latest weekly report from Arcane Research, the 7-day average daily trading volume has reached $13 billion recently. “Daily Trade Volume” is an indicator that measures the total amount of Bitcoin being transacted on the Bitwise 10 exchanges.
The Bitwise 10 exchanges have been selected for this calculation as these platforms are known to provide the most reliable data in the market. Obviously, these are not all the exchanges that exist in the sector, but their data still provides a reliable approximation of the trend of the entire spot market.
When the value of the indicator is high, it means that a large number of coins are seeing some movement in the spot market right now. Such a trend suggests that traders are currently active.
On the other hand, low values suggest that the BTC market is not seeing much activity at the moment. This type of trend can be a sign that overall interest in the asset is currently low.
Now, here is a chart showing the trend of the 7-day average daily Bitcoin trading volume over the past year:
Looks like the 7-day average value of the metric has been pretty high in recent days | Source: Arcane Research's Ahead of the Curve - February 21
As shown in the graph above, the 7-day average daily trading volume for Bitcoin has seen a sharp increase over the past week or so. With this latest burst of market activity, the value of the metric has reached $13 billion, which is the highest observed this year so far.
From the chart, it is visible that this level of spot volume also happens to be the second highest since February 2022, with only the post-FTX panic trading days in November recording higher values.
An extreme majority of the volumes are still concentrated on Binance, continuing the trend seen since the removal of fees on the platform. “Volumes on the other spot exchanges are below January peaks at $680 million, as Binance’s volume still represents 95% of daily BTC spot volume,” the report notes.
The reason behind the latest increase in the indicator has been the sharp price action that the cryptocurrency has observed in the last week. In general, investors are most attracted to markets when they show volatile movements, which is why trading volumes increase during such periods.
Below is a chart showing how Bitcoin volatility, a metric that measures the deviation of returns from the norm, has changed over the course of recent price action.
The metric's value seems to have increased recently | Source: Arcane Research's Ahead of the Curve - February 21
Following the recent price swings, the Bitcoin 7-day volatility has increased to a value of around 3.9%, which is the highest level seen by the indicator since November 2022.
BTC price
At the time of writing, Bitcoin is trading around $24,100, up 9% in the past week.
BTC has declined over the last 24 hours | Source: BTCUSD on TradingView
Featured image from André François McKenzie at Unsplash.com, Charts from TradingView.com, Arcane Research
