Cryptocurrencies were largely down on Tuesday, indicating that a correction is approaching. At press time, Bitcoin was trading at $49,900 and had lost around 2.4 percent in the previous 24 hours.
As the short-squeeze rally slows, Bitcoin’s trading activity on major spot exchanges has decreased during the last week.
“After the seven-day average real BTC trading volume pushed towards $7 billion last week, we’re now back to $5 billion,” Arcane Research wrote in a Tuesday report.
If bitcoin continues to trade higher on declining volume, “it can signify an exhausted market, and it will probably not be a sustainable move,” Arcane wrote. “We want to see a clear uptick in volume if the BTC price jumps up towards $50K again.”
Some analysts believe that crypto prices will recover in the long run, albeit the rate of increase will likely slow in the short term.
For the time being, technical charts indicate that bitcoin is still in breakout mode, with support hovering around $42,000. A brief phase of profit taking could be triggered by a loss of short-term momentum.