Here’s How to Check if Bitcoin is Falling in Price

November 22, 2021 By admin 0

Over the past few months, Bitcoin investors have been in a state of euphoria as the crypto king rallied and hit new highs. However, there are times when there is a sharp drop.

Bitcoin – Rising high, plummeting?

In terms of price movement, the probability of a major drop seems to be quite low. However, at the time of writing, some on-chain indicators are repeating the signals of May 2021 while others are reaching their thresholds.

For example, the illiquid supply shock rate that recovered from a bearish divergence of just over a month broke 2019’s uptrend. This was followed by a drop in May that saw Bitcoin drop 53% in 3 months.

Currently, this indicator is in the bullish zone. Once the market registers another bearish divergence, it will be a signal for you to become cautious again.

Bitcoin’s illiquid supply shock rate | Source: Glassnode

Then there is the on-chain cost base ratio, which compares the actual price of the short- and long-term holders. Accordingly, the market is not too hot yet.

However, that does not mean that investors should feel comfortable as in 2013, it took less than 3 months for this indicator to break the red warning line.

Bitcoin On-chain Cost Base | Source: Glassnode

Finally, despite the price hitting a new all-time high this month, Bitcoin’s social dominance has dropped to a May low. When these levels were last reached a few months ago, Incident in May 2021 has shaken the market. So if it continues, BTC could be in trouble.

Bitcoin Social Dominance Rate | Source: Santiment

However, the good news is that since NUPL is still far away from the 0.75 mark, investors can be assured of the possibility of an immediate drop in price because in the past, the price has never dropped until it reaches that line. .

NUPL Bitcoin | Source: Ali Charts

The important thing here is that with the long term hodler starting to sell, the market can reverse if the trend continues for too long, especially as long term selling has never been in the market’s favor.

Therefore, investors should exercise caution if either of the above two reminders is triggered. At that time, most likely the price will drop.