Despite the more bullish sentiment in the market, Bitcoin’s transaction volume has sharply decreased since the beginning of March. Transaction volume had been increasing for roughly year leading up to March. Could this signal price action is around the corner?
Bitcoin’s volume lining up to break all-time highs
After the “Bitcoin Bubble” popped at the end of 2017, Bitcoin’s transaction volume quickly dropped with it. The resemblance to price is eerie, but there’s no clear direction of a correlation.
After the drop in price and transaction volume, the transaction volume slowly started to climb up again. This time, seemingly being less affected by the decreasing price. As markets kept plummeting, from $9.000 to $6.000 and from $6.000 to $3.000, transaction volume was on track to break all-time highs.
Sharp decline in transaction volume
On the 3rd of March 2019, Bitcoin transaction volume suddenly sharply decreased. Over the course of about a week, the number of transactions per block decreased from roughly 2400 to about 1500. The last time we witnessed such a dip was around the end of December 2018, shortly after the price drop from $6.000 to the $3.000 lows as price rebounded to $4.000.
This time however, we see no significant price action as of yet. While transaction volume is decreasing, trading volume is slightly up. This behavior could signal an increase in speculation on the price, which does match the recent increase in volatility.
Calm before the storm?
Transaction volume is on the decline, and while it may not have a direct correlation with price, it does offer some interesting insights. It is a direct result of the usage of the Bitcoin network. And therefore, it should raise some serious questions.
Are people making fewer Bitcoin transactions because of a decrease in the number of users? Or, are people done accumulating and holding on for the explosion that is to come?