Bitcoin’s upward trend in price, which has seen it increase by nearly 70% since the beginning of 2023, has been accompanied by a rise in Bitcoin trading volumes. Recently, daily trading volumes reached their highest level since the FTX collapse at more than $70 billion. Bitcoin is currently trading just above $28,000, up over 40% compared to earlier monthly lows under $20,000.
It appears that Bitcoin trading volumes are on an upward trend, with the 21 and 50-day moving averages of volumes recently rising above the 200DMA of volumes, and the former closing in on its highest level since mid-2021. Generally, rising trading volumes come during time periods of aggressive market movement, i.e., during acute bull and bear market phases. The Bitcoin bulls will be hoping that the market remains within the former of these phases.
At the same time, on-chain data shows that activity on the Bitcoin blockchain itself is also picking up. For instance, the number of transactions taking place on a daily basis on the Bitcoin blockchain recently hit its highest level since early 2021. Meanwhile, the rise in the number of active addresses on the Bitcoin network in recent weeks hasn’t been quite as impressive, but the metric is still close to multi-month highs. Elsewhere, the rate at which new addresses are interacting with the Bitcoin network for the first time has also been trending higher. Addresses with a non-zero balance also continue to increase and have surpassed 45 million for the first time.
Despite growing technical signs that the Bitcoin market is getting hot in the short term, analysts believe that rumblings of a financial crisis could send the world’s largest cryptocurrency by market capitalization even higher. Bitcoin has been acting as a safe haven in recent weeks, rallying alongside gold as investors turn to currency alternatives that aren’t vulnerable to a collapse of the traditional financial system.
If the US Federal Reserve Chairman Jerome Powell fumbles his communications on the outlook for policy tightening in the aftermath of Wednesday’s policy announcement, that could exacerbate crisis concerns. Bloomberg’s Senior Macro Strategist Mike McGlone suggests that Bitcoin’s recent strong price outperformance versus gold might be indicative that a new “supercycle” is setting in. He also posits that recent relative strength versus most assets may be a sign that Bitcoin is transitioning to trade more like gold and US treasuries, rather than a risk asset.
