Cryptocurrency News

Amid increasing steady money flow, cautious traders fear a dead cat boom

Recent extreme volatility in the cryptocurrency market after bitcoin (B T c) Falling to $ 30,000 and a recovery of $ 36,000 has left traders confused as to whether the current price action is a ‘dead cat bounce’, which will reduce token prices or a tangible reversal that will take place next to the market. Will determine the floor for the stage.

While the price of BTC is still more than 40% above its all-time high of $ 64,863, the bulls have managed to withstand several attempts to break below the support level of $ 36,000.

BTC / USDT 4-Hour Chart. Source: Trading view

A close analysis of on-chain data and exchange inflows shows that the sell-off of bitcoin caused a downturn in the entire market and Delphi Digital analyst Nick Papageorge highlighted the fact that BTC flows across exchanges “only one on Wednesday The hour exceeded 20,000 BTC. Which was the highest level since March 2020.

BTC exchange flow. Source: Delphi digital

FUD-o-rama destabilizes the market

One of the major sources of market unrest identified by Pappageorge was the daily FUD headlines, including another Chinese government Ban on cryptocurrency And there is concern that Tesla will dump its bitcoin holdings. These back-to-back fear-based narratives prompted retail traders to unload their coins on the exchanges to avoid another price slide.

Papageorge also pointed to concerns raised by a pair of hacks on the Binance smart chain, which saw a price drop of pancakeswrap (cake) and pancake bunny (bunny), the latter worth $ 45 million as market fears. Withdrawal of user fund of Rs.

The change in sentiment this week has been driven somewhat by positive headlines such as Formation of bitcoin mining council formation Following a meeting between Elon Musk, Michael Saylor and North American bitcoin miners, which has helped bring about changes in BTC and altcoins. The quick vicissitudes gave rise to debate as to whether current market activity resembled a dead-cat-boom or a trend reversal.

Experienced traders deposit at low prices

While many new entrants in the cryptocurrency market have reduced volatility recently, more experienced investors have a chance Deposit BTC at 50% off As the number of new accumulation addresses reached new all-time highs amid shakeouts.

The number of bitcoin accumulation addresses. Source: GlassNode

Well-known Twitter personality and bitcoin analyst PlanB posted the following chart showing how bitcoin revolves around the stock-to-flow (S2F) model, indicating that the recent recession is well within the standard range Is distracted.

BTC price fluctuations around the S2F model. Source: Alternative plan

Planby said:

“Shopping opportunities like today are rare (Q1 2019 when I wrote the S2F article, due to Kovid in March 2020, and now). Life is all about choices. “

To support a speedy recovery for bullish signals, Ashwath Balakrishnan’s May 24 Delphi Daily report highlighted the “fast-growing” circulating supply of Fiat-backed stable stocks, up from “15 billion in the last 5 days” Has increased to about 21 billion. “

Fixed currency circulating supply. Source: Delphi digital

While this may be an indication that dip buyers are “loading ammo,” Balakrishnan noted that “it may also be just a stable currency intermediary” and “to ensure that circulation supply does not fall sharply.” Is emphasized the importance of “. Flow will be deployed. “

A record quantity of dried powder is now available on the exchanges, but at the same time, an entirely new group of cryptocurrency investors, who have just experienced their first 50% pullback, are now wondering if they should exit the market Or double your investment. The more experienced the crowd, they are betting that the market is at a higher level, but further volatility is guaranteed by all.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and business move involves risk, you must do your own research when making decisions.