After seemingly a thousand years of stability and a slight downtrend, Bitcoin is back. The volatility is devastating. Trading volume appears to be picking up pace. And more importantly, the morale of the community increases. In any case, what do the data and the on-chain analysis say? Are the numbers high enough to warrant the excitement? Let’s explore them.
BTC price chart for 07/27/2021 on Bitstamp | Source: BTC/USD on TradingView.com
Trading volume is increasing, but is it a trend?
According to Arcane Research, the daily bitcoin trading volume hit $ 9.2 billion on Monday, which is the highest daily bitcoin trading volume since June 22nd. That might be a good sign that a healthy market is recovering, but hold your horses back. The market stagnated for a while, and not only that, before the surge we had “Four consecutive days under $ 3 billion”.
Related reading | Bitcoin trading volume has dropped to its lowest level since 2020
While $ 9.2 million is a promising figure, keep in mind that “the overall average 7-day trading volume is well below its annual average and trading activity in Bitcoin seems to have been low so far this summer”. From our point of view, we have no way of knowing if the market is picking up or if we are seeing a statistical anomaly. We have to wait and see.
BTC Daily Volume is rising | Source: Arcane Research
Volatility is back in action, but is it here to stay?
Even if traditional finance is afraid of it, the Bitcoin community thrives on volatility. And again, according to Arcane Research, “Yesterday the markets moved up, which caused the 7-day volatility to climb above the 30-day volatility.” So the volatility is down, but are we going to the races? Don’t be so sure.
“A similar event occurred last summer when Bitcoin consolidated all summer amid decreasing volatility before suddenly rising 11% on July 27, 2020. Then the market quickly corrected again towards the lower end of the consolidation range and stopped “within its consolidation range during the summer.”
But are we in the same cycle? So far, 2021 has been insane for Bitcoin. All predictions have failed. All models seem to be failing. And there is hope. The bull run might be over, but it might not be. And if we’re still in the Bull Run, it doesn’t make sense to compare the situation with last summer. We could be in a completely different ball game.
BTC/ USD Volatility is wreaking havoc | Source: Arcane Research
The short squeeze that created this
It All Happened “On Monday, $ 750 million worth of shorts were liquidated as Bitcoin climbed from $ 34,000 to $ 39,500. This is the largest short squeeze we’ve seen on Bitcoin, and it beats the squeeze when Bitcoin hit its ATH 2017 on May 16-17. December broke through. ”This catastrophic event shifted the tectonic plates of Bitcoin, setting volatility, trading volume and everything in motion. But how long will it take? That is the question.
Related reading | Short-term $ 150 million squeeze liquidated as Bitcoin scales over $ 53,000
As for the short squeeze, it’s worth noting that “Binance changed their API after the May 19th crash,” so the numbers may not be accurate. In fact, according to Arcane Research, “Bybt may have seriously underestimated the situation. This short squeeze was therefore very likely far greater than $ 750 million. ”
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