With the increase in stablecoin inflows, prudent traders worry that a dead cat will rebound

Bitcoin (Bitcoin) Fell to 30,000 US dollars and rebounded to 38,000 US dollars. What puzzles traders is that the current price trend is a “dead cat rebound”, which will lead to a lower token price or a solid reversal, which will be the next step in the market. The wave goes higher to lay the foundation.

Although the BTC price is still more than 40% lower than its historical high of $64,863, the bulls have successfully experienced multiple attempts to plunge below the support level of $36,000.

BTC/USDT 4-hour chart. source: Transaction view

Further analysis of on-chain data and exchange inflows showed that the sell-off of Bitcoin led to a downturn in the entire market. Delphi Digital analyst Nick Pappageorge emphasized the fact that BTC inflows from exchanges “exceeded them in just one hour on Wednesday. 20,000 BTC, “This is the highest level since March 2020.

Inflow from BTC exchanges. source: Delphi Digital

FUD-o-rama destroys market stability

One of the main sources of market turmoil identified by Pappageorge appears to be daily FUD headlines, including another Chinese government. Ban cryptocurrency And worry that Tesla will sell its Bitcoin holdings. These back-to-back fear narratives have led retail traders to dump coins on exchanges to prevent prices from falling further.

Pappageorge also pointed out two hacking attacks on Binance Smart Chain. The prices of PancakeSwap (CAKE) and Pancake Bunny (BUNNY) plummeted. Due to increased market concerns, the latter lost US$45 million in user funds.

The improvement of positive emotions this week contributed to the improvement of emotions this week to a certain extent, for example Establishment of the Bitcoin Mining Committee After a meeting between Elon Musk, Michael Saylor and North American Bitcoin miners, this triggered a turnaround for BTC and altcoins. The rapid reversal has sparked debate about whether the current market activity is a crash rebound or a trend reversal.

Experienced traders accumulate at a lower price

Although many new entrants to the cryptocurrency market find the recent volatility disgusting, experienced investors have seized the opportunity Accumulate BTC with a 50% discount During the merger, the number of new cumulative addresses reached a record high.

The number of Bitcoin cumulative addresses. source: Glassnode

The well-known Twitter personality and Bitcoin analyst PlanB released the following chart, which shows how Bitcoin oscillates around the stock-to-flow (S2F) model, indicating that the recent economic downturn is completely within the deviated standard range.

The BTC price oscillates around the S2F model. source: Plan B

PlanB says:

“There are very few buying opportunities like today (when I wrote the S2F article it was the first quarter of 2019, due to the situation at the time, it is now March 2020). Life is choice.”

As for the bullish signs needed to support a rapid recovery, the Ashwath Balakrishnan report of the “Delphi Daily” on May 24 emphasized that the circulating supply of fiat-backed stablecoins has “rised sharply”, and has risen from “150” in the past 5 days. “Billion” increased to nearly 21 billion. “

Stablecoin circulating supply. source: Delphi Digital

Although this may indicate that bargain-hunting buyers are “full of ammunition,” Balakrishnan will definitely point out that “it may also be a stablecoin arbitrageur” ​​and emphasize the importance of “ensure that the circulation does not drop sharply to confirm these news.” Sex”. Funds will be deployed. “

A record amount of dry powder is now available on the exchange, but at the same time, a new group of cryptocurrency investors who have just experienced the first 50% correction is now wondering whether they should exit the market or increase their investment multiples. People with more experience in the crowd are betting that the market will go higher, but further volatility can be guaranteed.

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.