Bitcoin short squeeze restores trading volume and volatility

After a thousand years of stability and a slight downward trend, Bitcoin is back. Volatility is causing serious damage. Transaction volume seems to be picking up. And, more importantly, the morale of the community is rising. In any case, what does the data and on-chain analysis show? Are these figures sufficient to justify excitement? Let’s explore it.

BTC price chart for 07/27/2021 on Bitstamp | Source: BTC/USD on TradingView.com

Trading volume is climbing, but is this a trend?

according to Arcane Research,”On Monday, Bitcoin’s daily trading volume reached 9.2 billion U.S. dollars, which is the highest daily trading volume of Bitcoin since June 22.“This may be a good sign that a healthy market is recovering, but please stay calm. The market has been stagnant for a while, and not only that, before the surge, we have already”Less than $3 billion for four consecutive days.

Related Reading | Bitcoin trading volume drops to its lowest level since 2020

Although US$9.2 million is a promising number, please consider “Overall, the 7-day average transaction volume is still far below its annual average, and Bitcoin transaction activity so far this summer seems to be very low. “From our standpoint, there is no way to know if the market is picking up, or if we are witnessing anomalies in statistics. We will have to wait and see.

Trading volume BTC chart

BTC Daily Volume is rising | Source: Arcane Research

Volatility is back, but will it continue to exist?

Despite the fear of traditional finance, the Bitcoin community has flourished due to volatility. And, again based on arcane research, “Yesterday, the market moved up, causing the 7-day volatility to climb above the 30-day volatility.“So, the volatility is back, but are we going to start the game? Don’t be so sure.

“Last summer, a similar event occurred when Bitcoin was consolidating due to declining volatility throughout the summer, and then suddenly rose by 11% on July 27, 2020. Then, the market quickly pulled back to the low end of the consolidation range and Stay within the scope of integration throughout the summer.”

But are we in the same loop? So far, 2021 has been crazy for Bitcoin. All predictions fell through. All models seem to have failed. There is hope. The bull market may end, but it may not. If we are still in a bull market, it makes no sense to compare the situation with last summer. We may be in a completely different game.

BTCUSD Volatility Chart

BTC/ USD Volatility is wreaking havoc | Source: Arcane Research

The brief squeeze that produced this situation

Everything happened”On Monday, short positions worth $750 million were liquidated, and Bitcoin climbed from $34,000 to $39,500. This is the largest short squeeze we have recorded in Bitcoin, surpassing Bitcoin’s squeeze when it broke through its 2017 ATH from December 16th to 17th.“That catastrophic event changed the tectonic plate of Bitcoin and made volatility, trading volume, and everything work. But how long will it last? That’s the question.

Related Reading | As the scale of Bitcoin surpassed $53,000, the $150 million short squeeze was liquidated

It is worth noting that the short-term is “Binance changed their API after the crash on May 19,” So the numbers may be inaccurate. In fact, according to arcane research, the situation may be “Seriously underestimated by Bybt. Therefore, this short squeeze is likely to far exceed $750 million.

Featured Image by Steve Buissinne from Pixabay - Charts by TradingView

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