Bitcoin Enters 'Stagnation Phase' Amid Slumping Trading Activity
Bitcoin is facing a 'stagnation phase' as trading and on-chain activity slump to their lowest levels since 2019, according to a report by Bitfinex.
The report found that Bitcoin's exchange spot trading volume has fallen to its lowest level since 2019, with even Binance's fee-free policy introduced in 2022 not being enough to boost volumes. The 'turnover' indicator, which shows how actively Bitcoin moves, has also hit its lowest in 7 years.
Bitfinex views this as a signal that overall market interest has cooled sharply, with existing holders barely moving assets and new transactions not active. The report notes that the price of Bitcoin is failing to find a clear direction within a narrow range, with support levels at $52,699 and resistance at $67,176.
The stagnation in the Bitcoin market can be attributed to several factors, including macroeconomic conditions. While expectations of U.S. Federal Reserve rate cuts were quickly reflected in stock markets, Bitcoin did not receive the same benefits. Additionally, real average wages fell 0.2 percent from a year earlier and household sentiment weakened.
For Bitcoin to regain an upward trend, net inflows into spot bitcoin exchange-traded funds and an expansion in stablecoin supply need to appear together. The report notes that past cases have shown that price volatility can expand rapidly after markets become extremely quiet like this.