The price of bitcoin has surged 130% since the March low after the digital asset jumped as high as $8,816 on Coinbase. With today’s gains, the market has fully recovered from the March sell-off.
The market sentiments have already moved out of “extreme fear” after seven weeks, as per Crypto Fear and Greed Index.
The March sell-off though is still having a residual effect on exchanges, with BitMEX having lost 32% of its market share and an exodus of 91,000 BTC, worth over $700 million. Others like Bitfinex also saw a decline in BTC deposits during this time.
Market volatility already went back to the pre-crash level but now so has the volume. “Bitcoin volume has dropped sharply after the market crashed. Yet, we’re still around the same levels as the beginning of 2020 and the volume is now stabilizing,” noted Arcane Research.
Real BTC daily volume (7-day average)
The average daily volume of top derivatives platforms like BitMEX, Huobi, and OKEx declined from 30% in March to 60% in April while the average daily volume on spot exchanges fell by about 10%.
The price crash “makes us very worried, and it’s not a good thing for the exchange,” said Ciara Sun, vice president of global business at Huobi Group. “When people get hurt and get liquidated, it means we lost a lot of customers. And it hurts the whole ecosystem. Some customers, when they get liquidated, definitely need time. Others will not come back,” she added.
While the exchange recorded an influx of small retailers, holding less than one bitcoin, the number of large institutional traders, those holding between 10k and 100k BTC, had a sharp decline.
“Overall liquidity is down a fair bit, and everyone has to contend with that,” said Sam Bankman-Fried, CEO of FTX. “Volatility is up a fair bit, so a lot of people are providing less than they used to.”
At the time of writing, BTC/USD has been trading around $8,750 while yet again, in such a volatile day, more than $2 billion worth of bitcoin exchanged hands on top ten exchanges with real volume.
Bitcoin has already touched both the 100-day moving average and the 200-day moving average with fuel for more upside.
“BTC reaching the top of the channel with a picture perfect level to level move from 78-84 overnight into this morning. If the channel was going to break down, I typically wouldn’t expect it to be retesting the top here,” said trader Jonny Moe.
“Hoping that now that we’re back in a more reasonable price range we start to see some more tradeable price action forthcoming,” he added.
Meanwhile, Short-term holder NUPL has also entered the hope zone, a key moment to watch because “staying above this zone has previously indicated the start of bull markets.”
But once bitcoin calms down, altcoins might get to rally as well in the coming days.
These gains are occurring when halving is less than two weeks away, the discussion around which has expectedly risen along with the price.
“The interest levels are mostly correlating with positive momentum, meaning crowd consensus is widely optimistic about this event in spite of there being no guarantee of a price explosion (in either direction) at the time the halving finally executes,” noted crypto data tracker Santiment.
This surge in bitcoin price has the miners profitable yet again but post halving the production cost which is currently around $7,900 would double to $15,000. With the production cost surging while mining rewards get cut in half, the price needs to keep going up or unprofitable miners will be forced to dump their BTC and in turn price.