- 1 Bitcoin
Bitcoin is up 12% this month despite few traders: Since the beginning of June, Bitcoin’s price has increased by over 12%. The jump was attributed to news that BlackRock had filed for an exchange-traded fund (ETF) that invests in bitcoin on a spot basis.
It is more likely that bitcoin will move in the direction of large purchases by so-called bitcoin whales, since liquidity remains low. According to analysts, Bitcoin Is Up 12% This Month Despite Few Traders this is causing big movements in the price of the world’s leading digital currency.
There has been a sharp rally in Bitcoin this month, but it is not for the reasons you might expect.
Since the beginning of June, the world’s largest digital currency has increased by more than 12%. Earlier this week, it reached its highest level Bitcoin Is Up 12% This Month Despite Few Traders since April 14 by exceeding $30,000, according to Coin Metrics.
Market participants attribute the increase to news that U.S. asset management giant BlackRock has filed for an exchange-traded fund tracking the spot price of bitcoin.
Although that may have contributed to the outsized move, it is also possible to attribute it to another factor other than the news flow surrounding large institutions taking steps to embrace bitcoin and other digital assets.
The presence of large players and thin liquidity
This year, crypto “market depth” has remained very low. A market’s depth is defined as its ability to accommodate relatively large buy and sell orders. Bitcoin Is Up 12% This Month Despite Few Traders, Prices can move greatly up or down when market depth is low and large players place orders to buy or sell digital coins, even if the orders are not very large.
Liquidity in a market is measured by market depth
Bitcoin’s market depth has declined by 20% since the start of the year, according to data firm Kaiko. As far as market depth is concerned, bitcoin has been one of the hardest-hit cryptocurrencies.
CCData’s Jamie Sly, head of research, said that Bitcoin’s recent surge in value has been largely caused by large trades within a less liquid market.
“Our analysis of market orders over five Bitcoins reveals an aggressive surge in market buying, suggesting that large players are seeking exposure to digital assets.”
“When large orders are combined with thin books, the market is subject to more volatile movements,” said Sly.
Regulatory scrutiny from U.S. authorities has contributed to the lack of liquidity in the crypto industry. Major exchanges such as Coinbase and Binance have been sued by the Securities and Exchange Commission.
Liquidity issues, which have plagued the cryptocurrency market all year, are also responsible for bitcoin’s 80% rise year-to-date.
Retail traders have not yet returned: Bitcoin Is Up 12% This Month Despite Few Traders
A further notable feature of the current crypto market is the low volume of trading on exchanges. Crypto data website CoinGecko estimates a daily trading volume of $24 billion for the cryptocurrency.
There has been a significant decline in overall Bitcoin Is Up 12% This Month Despite Few Traders volume since the peak of the 2021 crypto rally, when bitcoin reached a high of nearly $69,000.
An early surge in prices is usually hoped for by large crypto investors in order to entice retail investors back to participate in the rally, which in turn increases the price of bitcoin and other digital coins. However, this has not occurred.
Clara Medalie, director of research at Kaiko, noted that trade volumes globally are at multi-year lows, and the increase is only slight.
The volume of trading and the volatility of price are two of the most telling indicators of crypto market activity. Volatility and volumes are both at multi-year lows, and even a rapid increase in price is not sufficient to attract traders.”
Why is Bitcoin Going Up?
The most likely explanation for the rise in Bitcoin’s price is a combination of several different factors. One possibility is the increasing interest in the Bitcoin Is Up 12% This Month Despite Few Traders asset class from institutional investors, such as hedge funds and other large investors.
Additionally, there is growing sentiment that Bitcoin could become a potential safe-haven investment, similar to gold, during times of economic uncertainty.
Bitcoin as a Safe-Haven Investment
The idea of Bitcoin as a safe haven investment has been gaining ground in recent months. This is due to the increasing evidence that the digital Bitcoin Is Up 12% This Month Despite Few Traders currency is immune to manipulation and government intervention, and thus, could provide investors with a “safe” place to store their value during times of economic crisis.
The Lack of Trading Volume
One factor that has been noted when discussing Bitcoin price increase is the low level of trading volume in the United States. Despite the increase in price, the amount of trading Bitcoin Is Up 12% This Month Despite Few Traders volume in the United States has been relatively low. This suggests that the increase in price has likely been driven by investors outside of the United States, and it suggests that the asset may still have considerable room for growth.