Bitcoin’s transaction volume has remained at levels seen since the bull run that began in October this year, with the cryptocurrency currently trading above $42,500. However, altcoins have yet to show the expected strong movements. According to leading on-chain data provider Santiment, the crypto market is at a significant crossroads.
The crypto market has reactivated in recent weeks, with bulls and bears flexing their muscles to sway prices in their desired direction. Santiment notes that the period from mid-October to early December was one of the best times to expect a surge similar to the market-wide all-time high increase seen in the second half of 2021, but now the market has reached a decision point.
Considering the substantial gains average investors have made in 2023, with Bitcoin alone increasing its market value by 154% since January 1st, it’s understandable that expectations were high. Some altcoins, such as Chainlink, Cardano, Solana, and XRP, have made impressive upward moves independently in the second half of 2023.
Santiment reports a decline in transaction volume for major cryptocurrencies last week, which may reflect a decrease in the Fear of Missing Out (FOMO) that drove many to their yearly highs. While Bitcoin’s transaction volume surprisingly continues at the highest levels seen since October, many altcoins have seen a drop in their transaction volume.
Another critical indicator to watch is social volume. Altcoins like BONK, ORDI, and INJ have attracted significant interest from investors since mid-December, as evidenced by social volume. However, data shows that Bitcoin’s social volume peaked in the first week of December and has since declined. This trend is typical, as gains from Bitcoin are often redistributed to altcoins in a new hype cycle. Current data reveals a drop in social volume for both Bitcoin and altcoins.
The decrease in social volume is not an absolute indicator of price peaks, and the market may continue to rise despite a drop in FOMO and hype. Santiment suggests that a reduction in FOMO can be an important factor for further increases. However, the increased supply of Bitcoin and some altcoins on exchanges, as indicated by recent movements, could pose a significant barrier to the ongoing rally and may signal impending or ongoing sales. In contrast, the movement of stablecoins like Tether and USD Coin to exchanges could be a positive sign, indicating more buying power entering the market. Yet, the 3.5% increase in Bitcoin’s exchange supply is a more significant concern than the encouraging movement of stablecoins.