Bitcoin (BTC) suffered its biggest drop in nearly ten days yesterday, falling more than 5.84% in just four hours, and is now pulling back to the $32,000 level again. Coinciding with U.S. Treasury Secretary Janet Yellen’s reintroduction of interest rate hikes at the G7 meeting, U.S. stocks Dow Jones and S&P 500, which only last week were approaching all-time highs, both fell at the opening of the 7th. In terms of news, China continues to put pressure on bitcoin mining and trading, and recently there have been rumors of a large number of microblogging KOLs being banned from the platform, along with market expectations of a Fed tapering, and this bitcoin plunge without warning is thought to have triggered a short-term panic.
Well-known crypto investors, the Winklevoss brothers, had a different take. Attending the Bitcoin 2021 conference in Miami, the brothers claimed, “Bitcoin is gold 2.0. gold has a market cap of $10 trillion, while bitcoin has a market cap of about $1 trillion. Therefore, we believe that the value of bitcoin will increase tenfold. Even with a buy-in price of $35,000, bitcoin is a good investment in the long run.”
In the crypto community, the term “Hodler” stands for someone who wants to hold on to cryptocurrencies for the long term. The term can be traced back to a 2013 forum post. In this thread, a user complained about the price of bitcoin but wanted to continue holding it. Due to a typo, the user wrote “hodl” instead of “hold” and the word has since become popular in the crypto world.
| Interesting Indicators
In recent weeks, Bitcoin has experienced one of the most aggressive corrections in its market history. During this time, I’d like to highlight some blockchain metrics that reveal a unique perspective on recent activity in the Bitcoin market.
1) Sharp Increase in Activity Among Mid-Term Holders
IntoTheBlock’s UTXO metrics show a sharp increase in bitcoin UTXO activity among holders between 3 and 6 months, while 1 to 3 month holders have seen the largest drop in activity. This suggests that mid-term holders have been the most active group in the market.
2) Western Countries Dominate Blockchain Activity in May
IntoTheblock’s East-West metrics show that Bitcoin on-chain activity is significantly greater in Western countries than in Asian countries. This suggests that investors outside of Asia are more active in buying and selling bitcoin.
3) Bitcoin Flows to DeFi Growing at a Steady Rate
IntoTheBlock’s Bitcoin Locked on DeFi metrics show that there has been an increase in the number of bitcoins entering the DeFi protocol over the past few weeks. This is a sign that bitcoin investors are looking for alternative sources of income.
4) BTC Inflows to Centralized Exchanges Rebound to March Levels but Outflows Increase
IntoTheBlock’s exchange inflow metrics show that the amount of BTC flowing into centralized exchanges spiked during the mid-May crash, but is now back to the levels seen in March when prices were around $55,000. However, there has been a sharp increase in BTC flows out of centralized exchanges, indicating market uncertainty.
5) Exchange BTC New Addresses Decline, but Mid-Term Holdings Increase
IntoTheBlock’s Time-Hold indicator shows a steady decline in the number of active new addresses holding BTC for less than 1 month, and an increase in the number of addresses holding BTC between 1 and 12 months. This is a positive sign that speculative sentiment in the market is declining due to the recent correction.
| Learn to filter market noise
Bitcoin is the only truly free market in the world. Bitcoin users are always able to find the equilibrium price of bitcoin. If the price of bitcoin changes by 30% in one day, no one will stop it from moving. Only the will of investors can change the market trend. That’s how the free market works.
Therefore, bitcoin’s price volatility is a feature, not a bug. Rumors can have a major impact on a free market like Bitcoin. In the Bitcoin world, rumors can quickly reach unbelievable levels. One night you go to sleep buying bitcoin for $43,000 and when you wake up, the price of bitcoin has dropped over $10,000 thanks to a tweet from Elon Musk.
While seasoned investors understand that Elon Musk may be trying to manipulate the price of bitcoin in his favor, most short-term holders will eventually sell their bitcoins for fear of losing money. These people lack confidence in bitcoin and can get caught up in what I call market noise. Those who don’t know how to filter this market noise miss out on many buying opportunities. The purpose of these messages is to cause panic and send market sentiment into extreme fear.
Giant whales and institutional investors take advantage of every opportunity the market offers them to make a bottom buy. For them, buying bitcoin at $30,000 was a no-brainer. In contrast, retail investors are hesitant to take action. They are afraid that the price of bitcoin will fall even lower.
The problem is that these retail investors only have a short-term view of things. For Bitcoin, this is a foolish mistake. You have to take the long view. If you can do that, you’ll understand why buying bitcoin for $30,000 is a unique opportunity. The news and rumors that spread around often give investors the impression that more happens in the bitcoin world in a week than in the stock market in an entire quarter.
This is indeed true. The world of Bitcoin is a young and rapidly evolving one. In order to be able to fix bitcoin with confidence, you need to learn how to filter out all the noise. You need to distinguish and sort out both the information that has no value and the information that really matters for the future of bitcoin.
You should ask yourself the following basic questions about bitcoin.
“Will Bitcoin become a crypto P2P currency that everyone can use? Will its halved supply be followed no matter what? Will institutional investors still come to buy bitcoin? Does the security of the Bitcoin network continue to strengthen block by block? Is Bitcoin helping millions of ordinary people in emerging countries like Lebanon?”
To all of these questions, you would answer yes. While market noise can distract many short-term holders from the true value signal, you need to filter it all out. If you do, then you will be able to take advantage of all the opportunities that the Bitcoin free market has to offer. You will be able to make money with it instead of being subject to price manipulation by influential people like giant whales or Elon Musk.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/when-you-hold-bitcoin-filter-the-market-noise-first/
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