Cryptocurrency markets are notoriously volatile. But there are signs analysts and traders use to help predict a downturn. eking0x reports:
, the largest cryptocurrency with a market cap of $758 billion, is down 42% from its all-time high of $69,000 achieved only five months ago, as of this writing. Perhaps you're caught by surprise when the cryptocurrency market goes down. But for professional traders and market analysts, crashes are often foreshadowed by telltale signs and patterns.
Here are the favorite tools of traders and analysts interviewed by CoinDesk and how they use them to look for bearish signs in the cryptocurrency markets, spearheaded byAlthough bitcoin is often billed as a non-correlated asset, meaning that investors can hedge against the traditional market, that narrative does not hold in
Analysts measure correlation on a -1 to 1 scale, where -1 means the prices move in the complete opposite direction and 1 means they are perfectly synced. The report’s author, Vetle Lunde, an analyst at Arcane, told CoinDesk that “the correlations across asset classes are in an extreme state,” highlighting bitcoin’s all-time high correlation to equities and simultaneously negative correlation to gold and the U.S. Dollar Index . “It’s unlike anything seen in the market,” he said.
“Maybe it's caused by liquidity, resting market orders and more variations across market makers reacting to news in the equity markets, whereas the major market makers in crypto have a less varied response formula,” Lunde said.
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