ATH’s bitcoin price drop of $ 58,640 can be explained by higher selling pressure followed by successive sell-offs via spot exchanges. However, there is more to this bloodbath than the triggers that led to the event. These are the triggers to watch for in the future.
Bear in mind that – a popular metric, Bitcoin All Exchange Netflow, reached 37,000 to match the rising price on the charts. Here, positive Bitcoin Netflows mean increased volume Bitcoin flows. More than 37,000 Bitcoins flooded the top of the exchanges right before the correction. The flows came from mining ponds, private wallets, and cold stores. Moreover, HODLers who have been inactive for the past seven to ten years have brought their Bitcoins to the exchanges.
The last time bitcoin flows rose significantly in January 2021. Following this, the price of the cryptocurrency dropped from $ 40,600 to $ 34,000. In fact, Bitcoin netflows have anticipated corrections in the asset’s price with some precision several times in the past, and Black Thursday in March 2020 was one of those cases.
In all of these cases, the scale scores were ignored. This was the case this time as well.
Aside from bitcoin inflows, stable currency flows were another metric that predicted what would happen. Stablecoin inflows to exchanges have increased in line with the rise in Bitcoin’s price. On top of that, the number of new Tether titles reached a new ATH recently, with the previous ATH debuting in the first week of February.
More USDT addresses could be equated with more users moving around money, possibly including Bitcoin to identify exchanges. This is likely to have contributed to the bearish narrative.
Finally, one could argue that the general market failed to account for the most primitive instincts – greed.
The spot commodity indicator is an interesting gauge that is the least popular among traders. While there may be an unknown direct correlation between the spot commodity index and Bitcoin, investor appetite is shared by both.
It is worth noting that commodities rose to their highest levels in nearly 8 years amid booming investor appetite for everything from oil to corn, and the same comes at a time when investor appetite for Bitcoin is at its peak as well.
The metrics – number of non-zero headlines, trade volume on spot exchanges, and OI on derivative exchanges – showed a direct uptick in investor appetite, similar to commodities, and excessive greed led to corrections this time, just as it did. Several times before on this session alone.
Ergo, it might be worth keeping an eye on the aforementioned factors if you are looking to evade another market decline. If you were one of the unlucky people who participated in a $ 4.4 billion liquidation yesterday, you probably should.
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