INSUBCONTINENT EXCLUSIVE:
The amount of Bitcoin on exchanges gives an indication of what the big investors are thinkingInvestors always look for indicators to
understand or explain an asset's price movement
While it's easy to connect a regulatory statement or pending legislation to the price movement, it usually does not give a complete
Some price actions happen due to coincidence or pure unrelated luck
Bitcoin has shown a wild movement this year, rising from $20,000 (roughly Rs
15 lakhs) to $65,000 (roughly Rs
48.5 lakhs) and then again crashing to under $30,000 (roughly Rs
The world's largest cryptocurrency has now again risen above $60,000 roughly Rs
44.8 lakhs).In the cryptocurrency industry, it's very difficult to time or guess the price of, say, a Bitcoin
However, there are some key indicators that all Bitcoin investors should pay attention to
What are these indicators?1
Exchange BalanceMost of the trading activity occurs on centralised exchanges
Most traders and all speculators keep their coins on exchanges to take advantage of sudden price swings
The amount of Bitcoin on exchanges gives an indication of what the big investors are thinking
For instance, Bitcoin flooded off exchanges at the fastest rate in its history over the past few months
This exodus of coins indicates that Bitcoin has been transferred from short-term speculators to longer-term holders who are taking the coins
A reversal of this trend would indicate near-term sell pressure.2
Google Search InterestA simple but effective way to gauge the general interest in Bitcoin
Sometimes, a muted search volume can also indicate that institutional investors could be behind a rally and the retailers could join once
Bitcoin TreasuresCorporates investing in Bitcoin often have a long-term strategy
As more companies warm up to cryptocurrency, its usage would increase
This will create a domino effect and boost Bitcoin's value as an asset
Alternatively, if companies began to liquidate their holdings, the price is likely to crash
Most of the companies investing in cryptocurrency are public and so their actions can be easily tracked.4
As the active supply decreases, Bitcoin holders lean towards hoarding their coins, which further reduces the availability of the coin to be
Despite Bitcoin's volatility, Bitcoin holders have refused to sell, suggesting they believe its price to rise further.5
Regulatory ActionsA crackdown on the mining of Bitcoin by China this year led to a sharp decrease in its prices
Also, when El Salvador faced hiccups in rolling out Bitcoin as a legal tender last month, its price briefly came under pressure
But it recovered soon and has continued to rise
It is prudent to pay attention to regulatory actions like these.
