The aggregate 30-day moving-average volume for Bitcoin across Coinbase, Bitfinex, Kraken and Bitstamp is at its lowest level since August 2021, according to data compiled by Strahinja Savic at FRNT Financial.
That’s happened as the Federal Reserve and other central banks accelerate their fight against inflation, which has remained hotter for longer than many had expected it would.
And those buying the coin using leverage could feel an extra pinch: higher borrowing costs alter the risk-reward scenario of such trades, meaning that your potential return drops as your costs go up.
Data from Glassnode suggests that interest in Bitcoin has remained muted – on-chain measures indicate little growth in the coin’s user-base and minimal flows of new demand.
David Shafrir, CEO of SDM, an institutional OTC trading desk, says he’s seeing new clients coming in but that average volumes from pre-existing clients have dropped anywhere from 8% to 15%.
That desire to be in on the asset class may have changed – so far this year, it’s lost more than 10% amid a similar slump in other riskier assets, with analysts saying it will take a whole new catalyst to jolt prices higher once again.
Despite the relentless advertising, most of those who were inclined to buy Bitcoin have already done so,” said Steve Sosnick, chief strategist at Interactive Brokers LLC.
An oft-cited measure is that of Bitcoin’s correlation to other areas of the traditional market that might be hurt in a rising-rate environment.
Meanwhile, Bank of America’s Alkesh Shah and Andrew Moss in a 12 April note said that Bitcoin exchange outflows in the prior week totalled $1.2 billion and were the largest of the year.
Still, Russell Starr, CEO and executive chairman of DeFi Technologies, says Bitcoin is more an inflation hedge than a risk asset.