On the 6th of October, Ripple (XRP) saw its volume declining by over 50% over a period of four days. Ever since then, the price of the 3rd largest cryptocurrency by market capitalization has dropped by nearly 8% against the United States dollar.
Meanwhile, the volume of Bitcoin (BTC) has slightly increased to around $3 billion on CoinMarketCap and $2 billion on CoincCap.io. Even so, the most popular digital currency has not seen any substantial growth in price and volume that could indicate a short-term rally is in action.
The Small volume is not always a bad sign
A low volume rally is not necessarily a bad indicator. It could, however, be a sign of overstretched valuations. For instance, investors are reluctant to invest in fresh capital above a certain threshold.
According to technical analyst Edward Morra, the volume of BTC plunged to a record low this year. The drop in volume could mean that the cryptocurrency is less biased to the bulls than bears in the crypto market. The probability of an upside movement has also decreased as Bitcoin doesn’t demonstrate oversold conditions.
The drop in the volume of bitcoin in the past three days could be an indication that investors are reluctant to trade. People just observe the price direction of major digital assets and wait for the right time.
The decline in volume could also be a sign of seller fatigue. The bears might also be unwilling to sell-off bitcoin in the low price range. Therefore, bitcoin could begin a short-term rally in the next few days as it had done in the past two months.
The 50% drop in Ripple trading volume is a clear sign that investors are unwilling to take a risk at a time of uncertainty.
Meanwhile, Ripple (XRP) has enjoyed more spotlight than its rivals in the past two months. The cryptocurrency has secured major partnerships with financial giants including SBI and PNC.
