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For cryptocurrency loyalists who have been working in the field since 2017, the market movements of the past few days have led to flashbacks of some people, which has inspired people to have a long history of Bitcoin (Bitcoin) From the beginning of a long, two-year “cryptocurrency winter”, it dropped from $20,000 to $3,000.
The price of Bitcoin plummeted by 50%, from $60,000 on May 10 to a low of $30,000 during the worst period of the sell-off on May 19, prompting many to say that the 2021 bull market is at its highest point, but Chainalysis’s latest article Chief Economics Philip Gradwell (Philip Gradwell) highlighted some key data, these data indicate that the market may still have a higher claim space in the next few months.
Corrections greater than 25% are the norm in a bull market
In order to kick off the curtain and get a sense of this, Chainalysis pointed out that since 2017, there have been four more Bitcoin prices that have fallen by more than 25% in a 7-day period. The most recent example is that by March 2020, the price plummeted to $4,000.
Although the prices of BTC and Ethereum both fell following recent historical highs this week, from a historical perspective, the current price level is still rising, and there is still potential for further increases after an uncertain integration period.
Gradwell emphasized the fact that now, the wider cryptocurrency field is becoming more prominent and has become part of the mainstream narrative, “The industry needs to answer questions about environmental impact, use cases, illegal activities, and regulations.”
Winter hasn’t come yet…
As for whether another cryptocurrency winter is coming, Gradwell seems to be inclined to believe that the market does not yet exist, and mentions “many differences between now and the major price drops in March 2020 and December 2017” as an example of this. stand by. view.
In 2021, the increasing popularity of cryptocurrency will bring new entrants into the market who have purchased a large number of cryptocurrencies in large numbers, raising the stakes of the entire market and increasing the overall market value.
According to Gradwell, the data on the chain is:
“It is recommended that the retail industry trade on exchanges, and institutional investors have not bought as much as before instead of selling.”
The data should help dispel rumors that institutions have become one of the main driving forces behind the recent sell-off.
Retail dump when whales pile up
As shown in the figure above, the funds flowing into the exchange in the past week were low compared to the previous sell-off, 412,000 BTC was deposited in the past three days, and 412,000 BTC was deposited only on March 13, 2020.
According to Gradwell:
“This shows that most of the selling comes from people who already own assets on the exchange, who are often retail investors.”
To further support this understanding, Gradwell points to the following chart, which shows the “changes in Bitcoin held by investor whales in the 14 days preceding the current and past falling price bottoms after 2017”.
As shown in the figure, the post-2017 investor “Whale” purchased 34,000 BTC from May 18 to May 19. Month bigger reaction.
This shows that although still cautious, whales tend to buy rather than sell to buy on dips, which shows that larger participants in the cryptocurrency economy still believe that in the 2021 bull market, the Bitcoin and cryptocurrency markets have further progress. Upside.
The views and opinions expressed here are only those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, so you should conduct your own research when making a decision.
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