On-chain analytics firm Glassnode has highlighted how the Bitcoin Spot Volume spiked during the price drawdown, but it has since cooled off.
Bitcoin Spot Volume Shot Up During The SelloffWhen the value of this metric rises, it means more of the cryptocurrency is being involved in spot trading. Such a trend can be a sign that interest in the asset is going up.
On the other hand, the indicator witnessing a decline indicates investor attention may be moving away from the cryptocurrency as less spot trading activity is taking place.
Now, here is the chart shared by Glassnode that shows how the 7-day moving average (MA) value of the Bitcoin Spot Volume has changed over the last few years:
But what exactly did this activity correspond to? According to the report, it didn’t reflect a broad wave of fresh conviction buying. Instead, the Spot Volume increase was a result of traders panic reacting to the price drawdown.
This is backed by the trajectory followed by the indicator. From the chart, it’s apparent that while the initial Spot Volume increase was sharp, it was quick to cool down. The trend would imply that while the move drew attention from investors, it didn’t translate into sustained demand. “The lack of follow-through indicates that absorption remains shallow relative to the scale of selling pressure,” noted Glassnode.
In the past, price moves have generally only been sustainable for Bitcoin when backed by spot trading activity. With the recent Spot Volume increase likely only a sign of short-term repositioning and liquidation churn, the market is yet to see a wave of persistent volume. “For now, spot flows reflect engagement during stress, not a decisive shift toward constructive demand,” explained the analytics firm.
As is visible in the chart, Bitcoin has recently found support inside a thick supply zone between $60,000 and $72,000. This band on the URPD formed as a result of investor accumulation in the first half of 2024. According to Glassnode, the fact that the price has stabilized here could suggest that “prior buyers in this range are actively defending their positions.”
BTC PriceBitcoin has been on the way down again as its price has dropped to the $65,900 mark.
