Bitcoin returns to the fear zone as trading volume hits a monthly low

According to Glassnode, Bitcoin’s transaction volume hit a monthly low.

The source: Glass knot

The main reason for the decline in trading activity is likely due to the negative performance of the asset in the market. Bitcoin has lost 25% of its value since last month.

The source: TradingView

At the December lows, Bitcoin trading fell 38%. According to technical analysts, the trend in the cryptocurrency market is likely to remain unchanged for the foreseeable future, while long-term market conditions remain positive.

Previously, Bitcoin fell below the 140-day trendline and served as support for a trend that began in July.

With the number of quarantines increasing worldwide, the financial risks are significantly higher. This can have an impact on Bitcoin’s price development and general market conditions.

However, traditional asset and financial markets are recovering slightly, which could suggest that investors are overestimating the risks in the market.

On the other hand, as more and more retailers leave the financial markets, trading activity in the chain also decreases. This is nothing new on the pre-Christmas market. The traditional financial markets also saw strong volume declines at the end of the year.

Bitcoin feels “extreme fear” again

The Fear and Greed Index is a complex indicator that tracks volatility, market volume, social media discussions, market dominance and Google trends. It indicates whether participants are optimistic or pessimistic about a particular asset.

By December 2021, the Bitcoin Fear and Greed Index hit 16/100 (extreme fear) for the first time in almost 5 months. It went up a bit after that, but stabilized at that extreme low on Saturday, dropping back to 16 yesterday before climbing to 27 at the time of writing.

The source: Alternative.me

The index fell from the high of 84/100 to 57 points in just 8 months.

From a short-term perspective, analysts see the Bitcoin Fear and Greed Index drop to extreme lows as the price failed to hold above $ 50,000.

The last time the index was this low was when the crypto king traded below $ 30,000 in late July 2021, after a massive drop in the second quarter of 2021.

ETH inevitably outperforms Bitcoin?

The net capitalization of the crypto market is now below $ 2.5 trillion for the first time since October 15. From November 9-10, he managed to stay over $ 3 trillion for two days and this is an unprecedented record.

Bitcoin’s dominance (BTC.D – the ratio of Bitcoin’s capitalization to the rest of the market) is approaching a 7-month low.

While the price hasn’t changed much, ETH does a little better than Bitcoin. Because ETH / BTC is showing an impressive rally towards 44-month highs.

Often these trends occur at the same time and point to the coming “Altcoin season”, ie a time in which the big Altcoins are doing significantly better than Bitcoin.

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