- Crypto trading volume has been declining since Feb. 27, with Santiment attributing it to trader exhaustion, hopelessness, and capitulation, despite minor price recoveries.
- Market sentiment remains cautious, as even after a $100 billion recovery in market cap, trading volume stayed flat, suggesting traders are hesitant to buy at current levels.
- A true market recovery requires both price and volume to rise together, but without increased participation, crypto could remain in a state of stagnation with a downside bias.
A market intelligence platform is pointing to trader exhaustion, hopelessness, and capitulation as key factors behind the declining crypto-wide trading volume since Feb. 27. This trend could be an early warning sign of weakening market momentum, according to Santiment.
Trader Enthusiasm Dwindling?
Santiment reports that major cryptocurrencies have seen consistent drops in trading volume, even during minor price recoveries. This signals diminishing trader enthusiasm—a sign that market participants aren’t convinced by temporary price bounces.
In a post on X, Santiment explained that traders appear hesitant to engage, despite fluctuations in price. According to CoinGecko data, as of March 11, the total crypto market capitalization had fallen to $2.65 trillion, with a trading volume of nearly $164 billion.
Interestingly, the market bounced back within 24 hours, adding over $100 billion. However, trading volume remained flat, sitting at $122.6 billion by March 13 (1:30 p.m. EST). Santiment suggests this lack of volume growth indicates that fewer traders believe buying at current levels will lead to profitable outcomes.
Market Sentiment & Volume Trends
The crypto market surged following Donald Trump’s confirmed U.S. presidential election victory, but since Jan. 20, the trend has been downward. On that day, Bitcoin (BTC) skyrocketed past $109,000, setting a fresh all-time high. While some attribute the subsequent decline to trade war fears, Santiment argues that the absence of trading volume during minor price bounces could be a warning sign of a larger shift in market momentum.
Santiment explains that shrinking volume during small rebounds isn’t inherently bearish, but volume is a key metric reflecting participation from both retail and institutional traders. If both groups hesitate to act, waiting for the other to move first, it can result in stagnant price action with a slight downside bias.
What’s Next? Watch Trading Volume Closely
Santiment emphasizes that a sustained recovery requires both price and volume to rise together. Without a meaningful increase in trading activity, the market could remain in a state of caution—potentially leading to further uncertainty in price action. For now, all eyes are on whether volume will return or if traders will remain on the sidelines, hesitant to re-enter the market.
