Bitcoin's Monthly Volume Is Higher Than Yearly, Why It's Bullish

The data shows that the monthly average trading volume for bitcoin has now exceeded the annual average. Here’s why it could be bullish for the asset.

Bitcoin 30-day SMA volume has moved above 365-day SMA

According to data from on-chain analytics firm glassnodeThis is the first time since the LUNA collapse that this pattern has formed for a cryptocurrency. “Trading volume” here refers to the total amount of bitcoins that investors are moving on the blockchain.

When this metric has a high value, it means that many coins are participating in transactions on the network. Such a trend is usually a sign that traders are currently active in the market.

On the other hand, a low indicator value means that the chain is currently seeing very little activity. This trend may indicate that there is less general interest in the asset among investors.

Now, here is a chart that shows the trend of 30-day simple moving average (SMA) bitcoin trading volume over the past few years as well as the 365-day SMA of the same:

It seems that in recent times the lines of both the metrics have come together. Source: glassnode on twitter

The above graph shows that the 30-day SMA has increased in bitcoin trading volume recently. This suggests that the network is witnessing an increase in activity.

The number of coins moving around the network has increased as the cryptocurrency has seen a sharp rally, which has now taken the price above the $31,000 level.

Generally, rallies attract attention to the asset, as investors usually find such price action exciting. Thus, it is not unexpected that the volume has increased with this price increase.

With this latest increase, the metric caught the 365-day SMA and has just moved above it. The formation of this pattern suggests that the monthly average trading volume of the asset has finally exceeded the average of the previous year.

The chart shows that the last time the two lines showed this behavior was at the time of the LUNA collapse. Aside from this brief period, the indicator’s 30-day SMA has been under the 365-day SMA for the entire bear market and rally so far, which shows how little activity the asset has had over this period.

However, this trend may eventually reverse if the latest crossover between these two lines persists this time, in contrast to the crossover seen at the time of the Luna accident.

Increasing network activity is usually a positive sign for bitcoin, as it indicates an increase in usage. Notable rallies in the asset have historically been accompanied by rising volume, as this type of price change requires many active traders to be sustainable.

As the chart shows, the monthly and yearly SMAs of BTC trading volume also showed a similar crossover during the build-up to the 2021 bull run.