Bitcoin prices traded modestly lower Monday with the largest digital currency by market value residing just under $6,500. While bitcoin’s Monday declines were tolerable, what was more noticeable was slumping volume in the cryptocurrency.
Bitcoin, by far the largest digital currency, is not starved for attention, but that does not mean trading volume in the cryptocurrency is always robust.
In fact, some data points suggest that when the price of the digital currency falls, so does its volume.
“Over the past 24 hours, Bitcoin has achieved a new yearly low volume, demonstrating a lack of momentum and strength to recover to the higher region of $6,000,” reports CCN. “On Coinmarketcap, the volume of Bitcoin fell to $3.1 billion while it fell to $1.91 billion on CoinCap. The previous yearly low point of the Bitcoin volume was $3.2 billion on Coinmarketcap and $2 billion on CoinCap.”
Technical Challenges for Bitcoin
While volume in bitcoin is wilting, some market observers believe bitcoin offers near-term rally potential.
“Carpe Noctom, a respected cryptocurrency trader and technical analyst, stated that if BTC can close above the $6,800 mark in the days to come regardless of the low volume, a breakout above the $7,000 mark is still a possibility,” according to CCN.
Related: Bitcoin is Now Just as Volatile as Largest Tech Stocks
Bitcoin futures debuted on the Cboe in December, followed by a launch on the CME. Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year, perhaps as early as the second quarter.
However, bitcoin futures volume is not yet taking off due in part to the large margin requirements associated with these derivatives. Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies.
“Historically, BTC has tended to demonstrate minor recovery on Mondays, following two low volume days throughout the weekend. Over-the-counter (OTC) markets typically open in the beginning of the weak and close its operations prior to the weekend,” reports CCN.
For more information on the cryptocurrency market, visit the Bitcoin category.