LMAX Digital volume bounced back nicely on Tuesday. Total notional volume for Tuesday came in at $2.4 billion, 7% above 30-day average volume. Bitcoin volume was however still a little off, coming in at $960 million, down 12% from 30-day average volume.

But Ether volume continued to impress, coming in at $1.1 billion, up 65% from 30-day average volume. In fact, Ether volume was so impressive, it managed to exceed Bitcoin volume on the day. Total notional volume at LMAX Digital over the past 30 days came in at $67.2 billion.

Average trading size for Bitcoin comes in at $7,103. Average trading size for Ether comes in at $7,546. The average daily trading range for BTCUSD is $3,559. The average daily trading range for ETHUSD is $343.

The big news on Wednesday is the bill that passed in El Salvador to adopt Bitcoin as a form of legal tender. This is a major leap forward for Bitcoin and has been celebrated by the community for its success in highlighting the benefits of Bitcoin as a technology that will allow for faster and cheaper payments.

El Salvador has also committed to purchasing $150 million of Bitcoin, and the President has discussed the possibility of Bitcoin mining using energy from local volcanos.

The El Salvador story has consumed the crypto market and has also helped to serve as a prop amidst what has otherwise been a wave of bearish price action. On Tuesday, a story about the FBI seizing Bitcoin had been misunderstood as a hack on the Bitcoin network, which had been cited as a reason for some of the weakness on the day.

Ongoing concerns around regulatory headwinds and China crackdowns have been weighing on the broader crypto space, though ultimately, we think the market is simply going through an overdue period of correction following the parabolic price surge earlier in the year.

At the same time, we still see potential downside risk, at least over the short-term, if inflation metrics in the US continue to shoot up. If this happens, it will force the Fed into needing to be thinking about rates moving up sooner than later, which in turn, will likely disrupt US equities and risk correlated assets.

We continue to highlight Bitcoin being exposed to risk off in the short run, given the fact that it is still considered to be an emerging market by many out there. Of course, looking out, Bitcoin should be very well supported in such a backdrop, on its longer-term value proposition as a hedge against inflation and store of value.

Technically speaking, we still won’t rule out the possibility for a deeper drop in the sessions ahead. A drop back below $30,000 will warn of deeper setbacks towards previous resistance turned support in the $20,000 area, in the form of the previous record high from 2017.

It will now take a break back through $47,000 to take the pressure off the downside and suggest the market is getting ready to start making its way back to fresh record highs. We also highlight ongoing downside risk associated with the price of Ether as per our technical overview in the chart above.