What Must Crypto Traders Keep Track Of During Correction?

The unpredictability of crypto price movements makes it difficult for both long-term HODLers and short-term traders to keep their wits about them when prices drop off a cliff. Regardless of the cryptocurrency, you are trading in, you find yourself in a precarious position. Notably, the price of Bitcoin can adversely affect altcoins as well.

Anyone trading in the current market needs to comprehend how the currency’s recent price action has impacted its investors. Understanding the current market sentiment and establishing the right time frame to review an asset’s performance are two keys to success.

When a digital coin takes a dip, some of the holders will certainly take a loss. The Short Term Holder (STH) SOPR metric becomes important in this scenario. SOPR tracks the amount of profit ( 1.0) or loss ( 1.0) garnered by the currency on-chain. It considers only new entrants holding currencies for less than 155 days.

As for a long-term investment, the scenario becomes quite different. Post correction, when the market evolves, favorable conditions may emerge yet again. Generally, corrections don’t negatively affect long-term investors, as long as pricing trends on longer time frames such as daily charts are not broken.

In the case of long-term holders of coins, be they Bitcoin maximalists or institutions, there are very few instances of panic selling. They tend to hold on to their coins. The higher the number of long-term holders, the more they help to alleviate bearish pressure on the currency, simply through the mechanics of limiting supply in the face of greater demand.

Metrics like Coin Days Destroyed and Dormancy also provides greater insights into the market. The Coin Days Destroyed metric provides a tool to measure economic activity, giving more importance to digital assets that haven’t been moved for a considerable time. Dormancy is another metric that indicates the average number of days each spent unit of currency remained dormant before any movement.

When long-term holders of a cryptocurrency continue to make frequent sell-offs, the coin may witness a delayed continuation of its uptrend.

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