On-chain data shows that bitcoin transfer volume remains significantly lower than that seen at comparable prices during the peak of the 2021 bull market.
Total bitcoin transfer volume has so far peaked at just $118 billion
As CryptoQuant author Axel Adler Jr noted in a twitter.com/AxelAdlerJr/status/1776157526095987027/photo/1″ target=”_blank” rel=”noopener nofollow”>mail In x, the total transfer volume of this bull run has not been able to reach the peak of the previous one.
The “total transfer volume” here refers to the total amount of bitcoin that is involved in transactions on the network every day. The metric is measured in terms of the United States dollar (USD).
Below is the graph shared by the analyst showing the trend of this indicator during the last cycles:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/Bitcoin-volume-62x-lower-than-2021-ATH-despite-similar-price.jpeg" alt="Total bitcoin transfer volume” width=”2048″ height=”1290″/>
The value of the metric appears to have been riding an uptrend in recent months | Source: twitter.com/AxelAdlerJr/status/1776157526095987027/photo/1" target="_blank" rel="noopener nofollow">@AxelAdlerJr on x
From the graph you can see that the total volume of bitcoin transfers has increased in recent months. This is normal behavior in surges, as the network tends to become more active during such periods due to the influx of new users and the repositioning of some of the existing incumbents.
The opposite usually occurs in bear markets, as prolonged declines and long periods of boring consolidation result in general investors staying away from the cryptocurrency.
As evident from the chart, the value of the indicator had also naturally increased during the 2017 and 2021 bull runs. At the height of this latest rally, around November 2021, the total btc transfer volume had peaked at around of 740 billion dollars. This means that, at that time, the blockchain was processing the movement of capital worth 740 billion dollars per day. This peak remains the all-time high (ATH) for the metric.
In its latest rally, btc recently managed to establish a new ATH price, and it is still trading not far from these highs. However, despite this, the peak in total transfer volume observed so far is only $118 billion. This is only around 16% of the ATH value recorded at the height of the 2021 bull run, while the price levels seen recently have been comparable to those back then. What this implies is that the demand for online commerce is much lower today than it was then.
As the chart shows, when the 2021 bull run first surpassed the ATH set in the 2017 bull run, its volume reached similar levels to the previous peak. Why then is the current bull market different in this pattern?
One potential factor could be the presence of bitcoin spot exchange-traded funds (ETFs) this time. Spot ETFs, which gained approval in January, buy and hold btc and allow their users to gain indirect exposure to the cryptocurrency in a way that is familiar to traditional investors.
Spot ETFs have generated significant demand for the asset, but these new investors are different from regular holders of the cryptocurrency who are actively participating in the network.
The new demand through spot ETFs is all “off-chain,” so to speak, as those holding their coins are the funds themselves, meaning these new investors can't exactly perform on-chain manipulations that would end up being reflected in the transfer volume.
btc Price
bitcoin had recovered above the $69,000 level yesterday, but it appears that the asset has already lost these gains as it is now trading around $66,600 again.
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Looks like the value of the asset has been overall moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from iStock.com, CryptoQuant.com, TradingView.com chart
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