Crypto Markets Trade Sideways as Volume Drops 20% from Last Week

Weak volumes and a dearth of trading catalysts have kept crypto markets in limbo in recent days. The slow grind is expected to persist for as investors await the U.S. Securities and Exchange Commission’s review of nine bitcoin exchange-traded funds due next month.

Market Update

The cryptocurrency market capitalization reached a low of $216 billion on Wednesday, as trade volumes fell to roughly $11 billion. The market has remained remarkably steady for the past two weeks, with total asset values hovering near $220 billion over that stretch.

At press time, all major cryptocurrencies are trading either at breakeven or slightly lower for the day. XRP recorded the biggest percentage drop, falling 1.8% to $0.466. Litecoin slipped 1.5% to $57.63.

Bitcoin was down 0.8% at $6,565 after hitting highs north of $6,700 at the start of the week. Ethereum’s price was down half a percent to trade near $226.

Low-Volume Implosion

New research by U.K.-based consulting agency Juniper suggests crypto markets will experience a gradual implosion as trade volumes continue to plummet. In a report called “The Future of Cryptocurrency: Bitcoin & Altcoin Trends & Challenges 2018-2023” Juniper evaluates the underlying risks of digital assets from the perspective of technical, social and regulatory factors.

According to Juniper, bitcoin’s daily trade volumes have declined from an average of roughly 360,000 per day at the height of the bull market to 230,000 in September 2018. Daily transaction values have plunged from $3.7 billion to less than $670 million over the same period.

A similar trend was observed across the broader cryptocurrency market. In Q2 of this year, cryptocurrency transactions for the market as a whole fell by 75% quarter-on-quarter.

“In short, given our concerns around both the innate valuation of Bitcoin, and of the operating practices of many exchanges, we feel that the industry is on the brink of an implosion,” Juniper said.

SEC Review Timeline

The U.S. Securities and Exchange Commission announced last week it will undertake a more comprehensive review of bitcoin ETFs that were rejected in August. The review period affects nine ETFs submitted by ProShares, Direxion and GraniteShares. The review, which will commence Nov. 5, 2018, allows “any party or other person” to convey their support or rejection of the ETFs in question.

Although the review period is not expected to change the regulator’s views, it could provide more information on what the proposed funds lacked. More importantly, the review will gauge the extent of public backing of a bitcoin ETF.

A joint submission to list a physically-backed bitcoin ETF by VanEck and SolidX earlier this year has received industry-wide support, prompting the SEC to extend its review of the proposed asset. CNBC’s Ran Neuner believes regulatory chatter surrounding bitcoin ETFs is about to send crypto prices higher in the short term. In a recent tweet, Neuner said the bitcoin price is “about to explode.” In support of this claim, he cited bitcoin’s rapid appreciation at the end of last year amid the expected launch of bitcoin futures contract. It took a mere five weeks for bitcoin to skyrocket from roughly $6,700 to nearly $20,000.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi