The 7-day average of Bitcoin (BTC) spot trading volume has reached a new 2022 high of $11.4 billion, based on Arcane Research’s data.
Spot trading volume measures the total of BTC transactions on spot exchanges anytime. High spot trading volume means a large volume of BTC moving in the spot markets, indicating that investors are actively engaged in transactions. The high spot trading volume also indicates high interest in cryptocurrency.
According to the data, the highest contributor to the sharp high came from the crypto exchange Binance. The crypto exchange contributed up to 87 percent of BTC’s 7-day average spot trading volume.
Binance has adopted a new policy that eliminates fees on some BTC trading pairs, including BTC/EUR, BTC/GBP and BTC/AUD. The exchange initially only implemented the policy in the U.S. but later expanded the implementation to cater to its global clients. This policy encourages traders who use high-volume trading tactics to generate profits to conduct spot trading using BTC.
BTC value after CPI release
Data showed that BTC lost 17 percent of its value in the past month. On September 14, BTC’s value went below $20,000, below its current support value. The $19,870 per unit rate was BTC’s worst level since September 9.
Analysts attributed the value drop to August’s Consumer Price Index (CPI)—an inflation indicator—released this week which exceeded expectations by 0.2 percent. The inflation data increased the likelihood for the Federal Reserve to hike interest rates between 75 and 100 basis points next week.
“The biggest and growing downside risk for the market is increasing recession risk as the Fed aggressively tightens into a slowing economy,” Truist Advisory Services’ Keith Lerner said.
“On the other side, there is at least one partial offset: Investor expectations are low and already braced for bad news.”
The possibility of an interest rate hike may affect BTC's price stability and the crypto industry in general. Data on September 13 showed that the total cross-market crypto liquidation had reached $355 million, the highest in the past few weeks. Of the total value, the short liquidations amounted to $88 million that day.
Financial experts advised against investing in high-risk assets in this situation. Eight’s chief executive officer Michaël van de Poppe said there would be “lots of volatility” in the market.
"Remind yourself that and avoid excessive trading,” van de Poppe added. “Right now, lows are taken and some consolidation seems to be happening.”
Ether (ETH)’s value also dropped despite its Merge rally. This week, Ethereum upgraded its proof-of-work consensus mechanism to proof-of-stake to improve efficiency. When the news came out, ETH outpaced BTC’s growth. On September 13, data showed an outflow of $61.6 million in ETH-based investment products, indicating that investors were worried about Merge’s success. Recent data also showed that ETH/USD and ETH/BTC pairs suffered extended losses in the past few days.
The traditional stock market was also hit by the recent development. The inflation data caused the U.S. stock to lose approximately $1.6 trillion on September 13. Apple's stock went down by $154 billion on the same day, the sixth biggest daily loss recorded in history.
The U.S. greenback, on the other hand, passed 109 points on September 13, its biggest gain since September 9.