Analysts note that the decline in crypto trading volumes and falling digital asset prices are signs of trader exhaustion and weakening market momentum.
Current Trends in the Cryptocurrency Market
Crypto trading volumes have been dropping since February when they peaked at $440 billion. Since then, they fell by 63% to $163 billion on March 12. CoinMarketCap shows a similar trend, with volumes peaking in early March and falling by 52%.
Analysts' View on Volume Decline
According to Santiment, trader behavior indicates a mix of exhaustion and capitulation over the past fortnight. Total market capitalization has declined by 25% since early February, shrinking by $900 billion. Weak trading volumes amid minor price rises can serve as an early sign of weakening market momentum.
Impact on Market Dynamics
Analysts note that declining trading volumes are not necessarily a direct bearish signal but for a sustainable recovery, both prices and volumes need to rise. The current market cap is around $2.8 trillion. The Crypto Fear & Greed Index remains in 'fear' territory since February 21.
The decline in crypto trading volumes may indicate weakening market momentum, although it is not directly a bearish signal. For a more sustainable recovery, volume increases must accompany price gains.
