Key Points
Bitcoin’s (BTC) recent surge in price has led some traders to anticipate a correction. However, new data indicates that the rally may be sustainable.
The increasing volumes of Bitcoin trades suggest this. Recent data shows that in the latter part of February, Bitcoin’s daily trade volume averaged over $10 billion.
A rise in Bitcoin’s daily trade volume typically signifies heightened market activity and interest. Higher trading volumes can positively influence Bitcoin in several ways.
The Impact of Trading Volumes
Increased volume often indicates improved liquidity. This makes it easier for traders to buy and sell without causing substantial price changes. Enhanced liquidity can draw more institutional investors, leading to a more stable market.
Furthermore, increased trading volumes are frequently linked to heightened investor confidence and engagement. However, these volumes have not surpassed the 10-month highs reached on 10th January, just before the ETF launch.
At the time of writing, Bitcoin was trading at $51,739.42, a 0.35% decrease over the last 24 hours. During this period, Bitcoin’s price fluctuated between the $50,0683 and $53,054 levels.
The price showed several higher highs and higher lows, but no significant trend was established. The resistance level of $53,054 was tested multiple times, suggesting it had weakened during this period.
The RSI for Bitcoin was at 50.52, indicating that the momentum around Bitcoin’s price was relatively neutral. If bullish momentum increases in the near future, the likelihood of Bitcoin’s price surpassing the $53,054 level will grow.
For Bitcoin’s price to increase further, interest from both whales and retail investors would need to surge. According to an analysis of Santiment’s data, interest from these groups seems to have declined in recent days.
There was only a surge in the addresses holding 1,000 to 10,000 Bitcoins. All other groups saw a decrease in the Bitcoins they held.
This suggests a brief period of profit-taking by Bitcoin holders. It remains to be seen whether these addresses will wait for Bitcoin’s prices to decrease further before starting to accumulate.
