Since late February, the digital asset space has had continuous price corrections, and many people don’t know why. Some sources attributed the price fall to the excessive selling pressure mounted by sellers unwilling to lose asset value to the dip. At the same time, some believe that the excessive activities of leverage traders might have aided the crash.
Although the face shows high signs of recovery since the unexpected crash, it’s still unclear what the future holds for crypto holders as many have lost money to the dip. Many assets are already moving out of the red zones by welcoming new gains, which might take the industry into a bull run. If the sector eventually commences the bull run, it would help cryptos that have not had notable gains surge.
Glassnode explains the reasons for the crash
One of the industry’s well-known data analytics firms, Glassnode, shared some details that might have triggered the price crash. The firm also noted that the crash might have driven out some leverage traders in the industry. Many firms are currently studying and trying to understand the crash to prevent the price fall from happening in the future.
If the price fall persists, it could significantly hinder the sector from growing as it should. The industry, which is finally getting mainstream media’s attention, needs to remain attractive to assure global adoption.
Also read:Glassnode released the report on March 1st, and the report analyzed the recent price crash in the crypto industry. The crash is the second major crash digital assets have had since 2021 commenced, with the first being around January since the iconic $40,000 reach for Bitcoin.
Bitcoin’s price action might have triggered more drops in the industry because other cryptos slide downwards alongside the benchmark crypto. Interestingly, some institutional investors see the price drop as a healthy correction, but not many people in the industry agree with that view. Some believe that the industry is getting dominated by market bears, therefore causing the values to drop.
The industry has growth potentials
The two crashes show that the industry is relatively new and still has potential for more growth and higher values. Experts explain that unexpected price surges often occur after the continuous price corrections; they believe that the correction helps the crypto gain some stability before it takes higher resistance. The Glassnode report revealed that the industry had around a 25% correction.
Most assets declined by 25% or more, with Bitcoin depreciating from $58,000 to around $43,000 at some point. The report also revealed that the February crash is a lot milder than January’s correction, where Bitcoin had a 30% price drop.
Glassnode also assures that the crash is healthy, despite what the whole industry thinks. The price drop has chased weaker and less experienced buyers from the sector, as they are afraid of losing significant investment in the dip. The report shared that it pushed out those who aren’t strong investors while giving investors space to buy the dip to get more gains.
Fortunately, most assets are gradually returning to their former position with the new gains. Bitcoin futures also saw a drop in open interest’s value as it’s now around $4 billion.
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