Some crypto analysts believe that as Bitcoin (BTC), which almost crashed to $100,000 over the weekend, tries to rebound from this sell-off, it will likely continue to rise. “lost its pulse.” In turn, this could mean that the cryptocurrency leading the pack is on the verge of losing its positive momentum.
Bitcoin at Risk of Losing Momentum
TeddyVision contributed a CryptoQuant Quicktake article that showed Bitcoin’s Inter-Exchange Flow (IFP) was trending downward, confirming the slow decline of inter-exchange activities.
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The IFP, for those who are not familiar with it measures the liquidity of crypto-exchanges. It can, in essence be used as a proxy for determining how active market making and arbitrage are.
Arbitrage is the act of purchasing an asset at a cheaper price from one platform, and then selling it for a higher cost on another. This allows you to benefit from the difference in price. Arbitrage is a way to make money from the inefficiencies of a system.
Liquidity tends to move quickly when such market inefficiencies are implemented. Trading bots start to move funds between platforms. Market spreads realign and the market feels more liquid. “alive.”
When the IFP increases, this is an indication that it’s time to act. While there may be greater market volatility as a result of a rising index, this is considered good for the markets because it shows that BTC’s bullish momentum is confirmed.
Since the IFP has been declining in recent weeks traders find it more difficult to arbitrage prices discrepancies, even if they are still present. TeddyVision stated:
Price discrepancies still appear, but they’re harder to arbitrage – liquidity is thinner, latency is higher, and risk-adjusted opportunities are drying up. The number of setups that traders find worthwhile is decreasing, while capital moves less between markets.
Analysts stressed that the liquidity was not going away, but rather it wasn’t circulating as much. Although a decrease in liquidity doesn’t crash the market it can drain its energy.
In conclusion, we can say that the market is not in a collapse, but just “too efficient” Traders are not able to take advantage of any arbitrage opportunity. If inefficiencies disappear from the market, then the asset may be put at risk. losing Its momentum.
BTC: A healthy correction?
The crypto market crashed on the 9th of October, resulting in the biggest single-day loss ever recorded. This massive $19 billion was the result. Although the optimism is waning, there are some analysts who remain hopeful. turnaround.
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EtherNasyonAL, a fellow crypto analyst stated BTC’s upward trend has continued despite recent crashes in the market, suggesting that the move towards a new record high may be imminent. BTC was trading at $111-731 as of press time. This is down 2.3% from the previous 24 hours.
Charts and image are from TradingView.com, CryptoQuant.
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Source: www.newsbtc.com
