Bitcoin Trading Volume Hits 8-Year High; Is this a BTC bear trap?

Bitcoin Trading Volume Hits 8-Year High;  Is this a BTC bear trap?

Bitcoin (BTC) has recently experienced increased price volatility, with the asset breaching key levels to the downside. However, the virgin cryptocurrency’s low price has not reflected other key figures such as trading volume.

In fact, Bitcoin trading volume on crypto exchange Coinbase has reached an eight-year high, representing the highest volume ever, data shared by the investment research platform Game of Trades on 15 November indicates.

“The capitulation volume spike is here. This is the highest BTC volume we’ve ever seen in any given week since 2015,” the platform said.

Bitcoin trading volume on Coinbase chart. Source: Game of Trades

Implication of Bitcoin’s soaring volume

In particular, the spike volume can be interpreted in different ways, considering that Bitcoin’s price continues to be dominated by the bears. For example, the calculation can be seen as a bear trap characterized by coordinated and controlled selling that is likely to create a temporary drop in Bitcoin’s price.

In fact, the Bitcoin price has recently tried to increase its recovery after plunging after the FTX cryptocurrency exchange crisis. In some cases, with increased Bitcoin volatility, short-term traders may be enticed to make more trades as they try to time the markets, hence a possible increase in trading volume.

Historically, events of trading volume rising to the highest levels signal capitulation, resulting in a potential price bottom.

Furthermore, in recent months, Bitcoin trading volume has increased in the wake of falling global fiat currencies against the US dollar. Investors appeared to be turning to Bitcoin as they sought to dump their fiat currencies in favor of the asset, which was seen as a hedge along with a source of arbitrage profit.

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Bears remain dominant

Meanwhile, Bitcoin’s price continues to be at the mercy of bears and bulls as the asset has failed to make a formidable move in either direction. At press time, Bitcoin was trading at $16,700, representing a loss of less than 0.5% over the past 24 hours.

In particular, as reported by Fibold, News from Kitco analyst Jim Wyckoff suggested that despite bulls trying to stabilize Bitcoin’s price, bears have a technical advantage.

Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.

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