The volume of bitcoin, the most dominant cryptocurrency in the global market, has risen by two-fold in the past week, supporting the recent mini bull rally of the crypto market.
Last week, CCN.com noted that the low volume of bitcoin is a concern for the short-term trend of the market. For instance, on July 9, the volume of bitcoin was lower than that of Tether (USDT), a widely traded stablecoin whose value is equivalent to the value of the US dollar.
Less than seven days ago, the volume of BTC was below $3.3 billion and as of July 18, the volume of BTC remains above $6.4 billion.
The daily trading volume of Tether is still at $4 billion, at its all-time high. In a bear cycle, the high volume of Tether can be referred to the action of traders of hedging the value of major digital assets to the US dollar. In a bull market, an abnormally large volume on Tether can be attributed to traders moving their funds out of the stablecoin to invest in digital assets.
On major cryptocurrency exchanges like Binance, the trading volume of BTC against USDT has increased by over four-fold, from $100 million to $432 million. The recent rally of BTC from $6,600 to $7,400 and the surge of Bitcoin Cash from $700 to $860 could not have been able to sustain itself if the volume of the crypto exchange market had remained low.
However, over the past few days, the volume of major digital assets including bitcoin, ether, Ripple, Bitcoin Cash, and Tether have complemented the mini bull run, creating a more stable rally for investors in the cryptocurrency market.
The market valuation of the cryptocurrency market is still below $300 billion and in an overall view, the cryptocurrency market is still in a bear market, until it achieves major support levels. Bitcoin was hovering around $10,000 less than two months ago and as of current, it is struggling to find momentum above the $8,000 mark, and as such, it is too early to conclude that the two-day rally of the cryptocurrency market will be prolonged throughout July.
Normally, the price spike of bitcoin and ether leads to small cryptocurrencies and tokens performing extraordinarily well, especially tokens based on the ERC20 token standard.
Apart from Polymath (POLY), Aelf (ELF), and WanChain (WAN), and a select few major digital currencies like Cardano (ADA), most have been outperformed by bitcoin, ether, and Bitcoin Cash over the past two days.
It is possible that investors are reluctant towards taking additional risk in allocating their funds in small cryptocurrencies in a recovery period that was only initiated less than 24 hours ago, after a week of strong downward trend.
From here, if bitcoin and the rest of major cryptocurrencies can sustain their high volumes, a likely move for the cryptocurrency market is to surpass the $300 billion mark and potentially eye previous support levels for bitcoin and ether, at $8,000 and $600 respectively.
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Last modified: May 20, 2020 6:31 PM UTC