Bitcoin enters a cool down period, is it good or bad for the market?
Entering 2021, Bitcoin has experienced a rapid rise, doubling from its final price of more than US$20,000 in 2020, reaching a historical high.
The main catalyst that led to the skyrocketing was the interest of institutions. There are also two recent Bitcoin ETFs that have greatly promoted the overall sentiment, because it means that more investors are provided with an entrance to invest in Bitcoin.
Although the Bitcoin market is prone to a parabolic rebound in recent days, we must face up to the existence of the following four bearish factors, which may affect the price in the next few months.
However, this does not mean that the price of Bitcoin will definitely fall, but various signs indicate that the cool down period has arrived.
1. Fear/greed index
When the market rises, people will be afraid of missing out due to greed; when the market falls, they will panic and sell the cryptocurrencies immediately.
The Bitcoin Fear/Greed Index Index is collected from 5 sources to visually show the changes in the cryptocurrency market sentiment: volatility (25%), market momentum/trading volume (25%), social media (15%), market survey (15%), dominance (10%), Google trends (10%).
These five data reflect the current sentiment of the Bitcoin market and represent it from 0 to 100, with 0 representing “extreme fear” and 100 representing “extreme greed”.
2. Bitcoin Escape Index
The Bitcoin Escape Index is referring to the “Bitcoin Two-Year MA Multiplier Index”, which adopts the 2 Year Moving Average, and 5 times the moving average line.
Based on history of Bitcoin, when the price exceeds the 2-year moving average x5 (red line), it is a signal to sell at the top, and the sale of Bitcoin will result in greater gains.
All signs indicate that Bitcoin has entered a cool down period. In fact, Bitcoin entering a cool down period is a good thing for the market. When people face huge wealth, they will get lost. The market entering a cool down period can promote industry precipitation and accumulation, as well as allow everyone to focus on the essence of blockchain. As a value application technology, the blockchain technology is bringing real utility value to the commercial society. As a commercial application blockchain, NGK has been committed to using blockchain technology to accelerate the sound development of the commercial market since its establishment, and it is well-known in the crypto industry for creating a series of tokens for commercial ecological application purposes. Recently, NGK has launched the NGKEX, an ecological exchange to meet the trading needs of several major currencies in the NGK ecosystem, such as NGK, BGV, SPC, USDN, VAST, etc.; it also facilitates the trading and circulation of various sidechain currencies. At the same time, the NGKEX has continuously optimized its core functions from enhancing the level of security protection, leveraged financial trading system, platform promotion and application mechanism, etc., improving the comprehensive advantages of the product and the crypto asset trading mechanism.
