To which way the cryptocurrency market is moving, let us see it in the perspective of Bitcoins price fluctuations in the last week
On chan analytics platforms for cryptocurrency including IntoTheBlock, brings before the deep analysis of top news stories taking place in the crypto market. By thoroughly analyzing Bitcoin’s public nature, these platforms have excellent machine learning algorithms that extract the relevant data providing the facts about developments in the industry.
So let us now understand the factors related to Bitcoins crash from a data perspective
We would specifically take a look at those indicators which are active in excessive speculation of Bitcoin. We would also learn about the results of the price crash in derivatives markets and the next potential targets for Bitcoin’s price.
Bitcoin’s Crash Aftermath & Next Moves
As several banks were releasing the latest Bitcoins price predictions of 6 figures, we see the same things happening in the Bitcoin and broader crypto markets showing a steep correction.
By looking at last week’s Bitcoins price movements, here we have made a list of indicators of the market which remained quite busy by following an impressive rally. It predicted Bitcoin and Ethereum going to be doubled in price in less than 30 days’ duration.
Now as we see that Bitcoin and Ethereum both have dropped approximately 20%, we can outline some of the actual reasons for the downward trend and could also predict where Bitcoin would stand in the future. All these analyses are derived from the key on-chain and market matrix but they are not to be trusted as financial advice.
Signs That Bitcoin’s Rally Was Over-Extended
These days we again notice that Bitcoins price is quite high due to short-term interest which was the same in 2017. You can find it in blockchain data and Google searches. Observing Bitcoin’s on-chain data, IntoTheBlock’s Traders metric tracks the number of addresses with a weighted average increased holding time under a month. And amazingly the findings of this indicator show that it reached its highest level in over three years, increasing by over 17% over the last 30 days.
It shows that a large number of addresses were following Bitcoin’s rally, along with a growing amount of addresses and holdings being allocated to traders. This pattern showing the recap of previous hype cycles indicates the high speculation that had been taking place over the last couple of weeks.
Contrary to the number of addresses and volume holding which is indicated by many platforms like IntoTheBlock those holding for over one year going through a fall. Surprisingly, it happened in the first month in over two years that the number of Bitcoin holders dropped, for holders had even managed to grow throughout the 50% crash experienced in March 2020. The average number of Bitcoin owned by holders dropped by over 2% in the past 30 days. This was a clear indication that profit-taking investors are constantly following the strong price run-up.
And here is also an interesting thing to note that with the increase in the Bitcoin Mastery price the search trends for Bitcoin are also on the rise. Google search trends touched the high point in its yearly level and second highest in its 12-year history. This trend supports the idea that large amounts of speculation have been taking place over the last few months.
This price crash in Bitcoins resulted in it one of the largest liquidations in constant swaps ever seen in the history of crypto. In twenty-four hours, around $2.5 billion in long positions were liquidated.
These extreme levels of liquidations show that derivative traders have been chasing this rally enthusiastically. It also supports the idea that a high number of traders are busy in on_chain trade and it is also a result of the high speculation rate that is taking place.
Where Is Crypto Heading Next?
By looking at the size of each cluster in the IOMAP we come across a kind of resistance in the volume of BTC in a specified price range. This resistance lies between $33.5K to $34.5K. It was an important area of significant buying activity where holders may look to sell. In any case, this range is broken, the next level to be predicted would lie between $37.5K to $38.6K, where 323K BTC had previously been bought.
On the other side, a new range with ample support for Bitcoin is coming up with $31K, the recent lows from this week’s crash. It is need of the hour that this particular buying area would have to hold to avoid a steeper correction from occurring.