Let’s face facts — it’s been a horrible week for all of us who care about crypto. Even some long-term investors are calling it quits and selling at a loss.
But here at Invest Diva, we do like to focus on some of the positive signals when we can.
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So let’s take a look at trading volume for altcoins.
We have to go back to September 2017 to see a market cap for altcoins this low. Back then, 24-hour trading volume was two or three billion dollars per day.
As the 2017 bubble inflated, volume spiked at forty-five billion dollars per day – and, as expected, volume decreased dramatically as prices fell. But it never fell to a couple of billion per day.
Now, trading volume is ten to fifteen billion dollars per day – and in the long-term, a consistently strong volume is almost always correlated to higher prices. So even though the market is down, there are enough participants to retain liquidity. Without liquidity, prices collapse.
That isn’t why we’re seeing this selloff, and it’s why we think this is a short-term bottoming-out. I’m not saying that we can expect a big jump tomorrow, but trading volume is a fundamental indicator of a healthy market.