It has been a tumultuous couple of days in the cryptocurrency market after the recent declines. However, according to one reputable analyst, the short-term downtrend may not be over, although other metrics in the chain also suggest the long-term approach is promising.
Other short-term disadvantages for the Bitcoin price?
The past two days have been challenging for the Bitcoin price. From a high of around $ 58,000 on May 12, it fell to $ 45,700 (at Bitstamp) yesterday.
It did so immediately after Tesla announced that they would no longer accept bitcoins as a means of payment for their electric vehicles. As the community scratches its head looking for answers as to why Musk changed his mind about Bitcoin’s environmental impact, the price has recovered to some extent and is now around $ 50,000.
However, according to Ki Young Ju from popular analytics resource CryptoQuant, further downside measures could come in the short term.
Don’t worry if you are a long-term BTC investor. Your portfolio is the same as that of institutional investors in the US.
If you are a derivatives trader, be careful in the short term. (Relatively speaking) whales deposit BTC on exchanges. – he said.
Bitcoin deposits on exchanges. Source: CryptoQuant
Exchange rate inflows usually indicate selling pressure – the most obvious reason someone might deposit a cryptocurrency on an exchange from the cold store is because of the sale.
Long-term BTC price looks good
Regardless, however, another metric in the chain signals longer-term positivity. CryptoQuant again provides insights into the matter and shows that the stable coin reserves on the exchanges continue to grow.
This even happened during the immersion that we have seen for the past few days.
Stable coins on exchanges. Source: CryptoQuant
Bitcoin price may be falling, but the amount of dry powder waiting on the edge to intervene continues to grow.
The larger these stable coin reserves are on the exchanges, the easier it will be for Bitcoin to get out of the slump when the upward momentum returns. – Note the analysts.
Stable coins on exchanges are another popular metric that analysts use to determine current market sentiment.
Another popular way to measure market conditions is the Fear & Greed Index. At the time of this writing, the market appears to be in a state of fear with the index trading at 26 basis points. This could be a signal that many believe investors are concerned and historically this has been a good opportunity for recovery.
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