The trading volume of cryptocurrencies has been declining since its peak on January 27, and traders’ behavior amid the ongoing decrease in market capitalization suggests a mix of “exhaustion, hopelessness, and capitulation,” according to Santiment.
? Crypto-wide trading volume has been dropping since its peak back on February 27th (when traders were optimistically buying dipping prices). After further market cap declines these past two weeks, trader behavior indicates a mix of exhaustion, hopelessness, and capitulation.… pic.twitter.com/0kqBVkKRpQ
— Santiment (@santimentfeed) March 12, 2025
The persistent decline in trading volumes, even during periods of price recovery, typically indicates waning enthusiasm among market participants. In such scenarios, traders become cautious and doubt that upward movements will continue, or that purchases at current levels will yield profits, experts noted.
“Moreover, weakening trading volume amid moderate price jumps can serve as an early warning sign of weakening market momentum,” they warned.
Without proper buyer participation, price increases quickly “lose momentum” in the absence of fundamental support for an upward trend. As a result, any recovery may be temporary, not excluding another downturn, Santiment specialists explained.
“A reduction in volume during minor rebounds is not necessarily a direct bearish signal,” analysts emphasized.
The indicator measures participation from both retail and institutional traders. If both groups wait for the other to become active in the market, it can lead to price stagnation with a slight downward trend, Santiment stated.
“To signal a healthier and more sustainable recovery, bulls typically want to see both price increases and volume growth simultaneously. Until trading activity significantly rises, cautious market sentiment is likely to dominate,” experts believe.
Meanwhile, they noted the rapid growth in transactions involving Tether’s stablecoin. On March 11, over 143,000 wallets made transfers in the coin — the highest in six months.
? Tether’s on-chain activity has been rapidly rising, with over 143K wallets making transfers yesterday alone (a 6-month high). When $USDT & other stablecoin activity spikes during price drops, traders are preparing to buy. Added buy pressure aids in crypto prices recovering. pic.twitter.com/siFOR7vSf7
— Santiment (@santimentfeed) March 12, 2025
“When USDT and other stablecoin activity spikes during price drops, it indicates that traders are preparing to buy,” Santiment specialists explained.
Some analysts suggest that Bitcoin may decline to $70,000 before a subsequent recovery. Additional pressure on the price could come from the expansion of trade wars by the U.S. administration.