The market has entered a euphoric phase, with rising profit-taking.After momentarily breaching the $71,000 mark, Bitcoin (BTC) fell sharply, reaching a low of $65,110 on Friday.After falling more than 5% in the previous day, Bitcoin has recovered to $67,553 at the time of publication.
Although the recent drop in Bitcoin’s price from $71,000 to $65,000 startled the cryptocurrency community, on-chain data suggests that this decline was not wholly unanticipated.On April 11, the cryptocurrency analysis firm Kaiko tweeted that there was an increase in anticipated short-term volatility.This is a result of the implied volatility for expiries in the next two weeks suddenly rising in just two days, from 59% to 71%.
Apart from that, there had been two important indications that had flashed warning signs, indicating the upcoming correction before it really happened.The on-chain analytics company CryptoQuant claims that although these signs have been pointing to weakening since late March, they may have been ignored due to market euphoria.
Since late March, the two most important metrics—traders’ unrealized profit margins and the realized price—have shown decline.Because of this, CryptoQuant strongly advises the cryptocurrency community to monitor these measures in the event that the current market correction lasts.With Bitcoin falling below $66,000 for the first time since April 4, liquidations have now totaled an incredible $920 million.Santiment claims that the S&P 500 and gold prices have also declined in tandem with cryptocurrency prices, indicating that worries about inflation and CPI are emerging in a number of industries.
The latest Glassnode analysis indicates that the market has entered a euphoric phase and that profit-taking has increased in tandem.One could argue that the current euphoria period (market in price discovery) is still relatively early in comparison to the ATH breaks of previous cycles.Many price decreases of more than -10% have occurred during previous euphoria periods; the majority of these drops were noticeably deeper, with a 25% average.With the current price, Bitcoin has dropped 8.32% from its peak, which was $73,750 in mid-March.