As we reflect on the past, it is important to figure out what really matters when it comes to pin pointing the reasons for volatility in the Bitcoin price. For instance, there is not a direct correlation between the months in the year and Bitcoin price movement with the exception of September. That is historically a bad month for Bitcoin, but other than that anomaly, it’s hard to pin point when the price will surge and when it will fall based on measurable indicators.
Some people look to network strength for the answer, others look to the charts, and others to traditional metrics like Fibonacci. But what about in the real world? What outside of the crypto market has the strongest impact on the Bitcoin price? Could it be government regulation? Lets discuss this on today’s blog, and what I think the best indicator for Bitcoin price movement is.
Nothing Should be considered investment or financial advice. Enjoy the ride.
What Impacts the Crypto Market the Most
There is no easy answer here for what to use as a Bitcoin price indicator. Obviously nothing will be the tell all, so it is hard to pin point something and call it reliable. Although people are constantly trying.
Some of the best theories for Bitcoin price movement right now are the Grayscale fund growth and Bitcoin Google search indicators. Grayscale is notorious for being one of the largest institution gateways for the wealthy to enter into a position on Bitcoin. Therefore, you would reasonably think this fund would effect the overall price of the digital asset. Sadly, these guys are professionals and almost exclusively purchase their Bitcoin through over the counter means. Long story short, they try their best not to move the markets with their investments by not utilizing public exchanges.
On the flip side, the Google search indicator is not controlled and can not be scripted. This is more of an organic measurement on the interest across the market in Bitcoin. Historically during times of extreme bull movements, these search metrics have been through the roof with people all over the world desperately trying to learn more about Bitcoin to see if they too should FOMO in at the top. This is no doubt a great indicator of past price movements, but sadly not a good indicator of future price movements.
Common Metrics Used By Investors
Based on a recent article by Cointelegraph, Some of the most common metrics used by investors are number of active addresses and the network hashrate. The thought process behind these metrics are that as the number of active addresses increases, so does the users or people using Bitcoin to send and receive payments.
More activity = More Demand
The problem with that logic is that mixing services that are used to clean Bitcoin, whales with hundreds of addresses and companies like gateway providers will distort this metric and basically make it unreliable. The second metric of the network hashrate will also vary greatly based on the current mining competition, technology, and the current position of the halving. For instance, right after the halving this metric tanked due to mining farms shutting down or switching to mining more profitable digital assets. This too clearly does not correlate directly with the Bitcoin price.
Now this article does give investors three metrics to dig into deeper on. This is to try and help cancel out the noise of these common metrics. These are those three metrics below:
- Average exchange deposits
- Bitcoin ‘sent from’ addresses
- Miners to exchanges
If you are interested, go check out that article to learn more on these metrics increase your chances of outsmarting the market!
My Favorite Bitcoin Metric
Well, here we are. Full circle back to looking at what my personal favorite metric is for Bitcoin price movements. From my personal experience, the largest indicator of a huge move about to happen in the market is stagnation in the price.
Let me explain. When the Bitcoin price seems to hold at a reasonable level for a prolonged period of time, pressure builds. Either this pressure is upwards or downwards, but it builds. The largest market movements come suddenly, and typically after weeks of prolonged stagnation. I know that is not a “metric” per-say, but it is a clue.
To me this just means, if the market has not moved very much for a few weeks – hold on to your horses. Usually there will be a strong swing sooner than later of $1,000 – $2,000 either up are down. If this swing is not caught by the bears or bulls respectively, then it will usually continue for the coming month pressing further in the respective direction. That is typically how long these swings last then they are always followed up by a swing in the opposite direction for the next month. It is just the cycle.
I know this is not an “indicator”, but it more comes from just being aware of the market movements. If you pay attention, watch the price movements daily, you will soon too be able to feel when the market has been quiet for too long. Usually, that is the best time to capture gains or prepare to grow your digital assets.
Crypto Market Indicators
Thanks for reading on What Impacts the Crypto Market the Most. Really there is no perfect way to predict the price movements of Bitcoin. All you can do is be smart, HODL, and wait for those halving effects to kick in.