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What lessons should be learned after the recent bitcoin price drop?

How to understand the bitcoin price drop from an ATH of $58,640. Some explanations relate to an increase in selling pressure and subsequent gradual selling on spot exchanges. However, in this carnage, the triggers that brought about this event are actually very numerous.

These are triggers that should be considered for the future.

Bitcoin Price Drop

Consider this. A recognized metric, BTC All Exchange Netflow, hit 37,000, which equates to rising prices on the charts. Here, positive Bitcoin netflows meant an increased volume of BTC inflows. More than 37,000 BTC quickly filled the cheapest exchanges ahead of the fix. Entries came from mining pools, private wallets, and cold wallets. Even HODLers who have been inactive for the last 7-10 years have brought their bitcoins to exchanges.

BTC entries last increased this significantly in January 2021. Following this, the crypto price fell from $40,600 to $34,000. In fact, Bitcoin net flows had correctly assumed asset value corrections several times in the past; Black Thursday in March 2020 is one such example.

In all of these cases, the results of the metric were missed. This time it was.

Along with bitcoin inflows, stablecoin inflows were another predictive metric. Stablecoin inflows to exchanges increased in proportion to the rise in BTC price. The number of new tether addresses has also recently reached a new ATH. Also the previous ATH was in the first week of February.

More USDT addresses could be synced as more users move funds, including bitcoin, to detect exchanges. This contributes to the downtrend.

Another metric that is less well known among traders is the Commodity Spot Index. While there is a little-known direct correlation between the commodity spot index and Bitcoin Midships, investor appetites are common to both.

The most valuable commodities hit their highest levels in nearly 8 years as investor appetites in everything from oil to corn exploded. The unique comes at a time when investor appetite for Bitcoin has also peaked.

Metrics – the number of non-zero addresses, trading volume on cash exchanges and open interest on futures exchanges – showed in precedent form a direct increase in investor appetite for commodities. Too much greed led to corrections this time too.

Posted in Crypto World

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