Understanding the flow of the order and its impact on the Bitcoin trade (BTC)
The world of cryptocurrency trade has grown exponentially in recent years, with prices that flow rapidly due to market feelings, economic indicators and regulatory changes. A key factor that contributes to these price fluctuations is the flow of orders, which refers to the number of purchase and sale orders made at a specific price. In this article, we will deepen the concept of order flow and its impact on the Bitcoin trade (BTC).
What is the order flow?
The flow of the order represents the cumulative sum of the purchase and sale orders made by individual merchants and institutions within a specific period of time. It is essentially a snapshot of the demand of the market of specific activities. The flow of order can be classified into different types, which include:
* Buy orders : represented by green arrows in the following graph, these represent the purchase of a resource.
* Sales orders : Indicated by red arrows, represent the sale or liquidation of an asset.
Types of order flow
There are different types of order flow that can be observed in cryptocurrency exchanges:
- Normal order flow : This is the typical scenario in which purchase and sale orders are balanced in a certain period of time.
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- Market tendens : When the price of an inheritance is in the upper or down, the flow of the order tends to favor one address in the other.
Impact on Bitcoin’s trade
The impact of order flow on Bitcoin trade can be significant:
- Discovery price : The flow of the order determines how prices are discovered and resolved in the market. When there is a volume of high purchases at a certain price, it can indicate that more buyers are willing to buy the activity, increasing the price.
- Mercato feeling : The direction of order flow often reflects the feeling of the market. If most merchants buy or sell in one direction, you can inform a solid trend. On the contrary, if there is an imbalance between the purchase and sale orders, it could indicate a potential reversal.
- Risk management : Understanding the flow of order helps operators to better manage risk. For example, if an activity has high volatility during normal orders flow periods, merchants can take advantage of these fluctuations buying or selling during periods of calm.
Real world examples
To illustrate the impact of orders on the Bitcoin trade, we consider some examples:
- 2017: The “White Whale” : During the 2017 cryptocurrency boom, a single investor (often called “whale”) bought millions of dollars BTC at extremely low prices, creating a large purchase order that promoted its increase in prices.
- ** 2020: The collapse of the Covid-19th Market market: while the global markets reacted to the COVID-19 pandemic, the price of Bitcoin fell, with an unusually large amount of sales orders that flooded the market. This caused a significant drop in purchase orders, which led to a brief correction.
Best practices for operators
To effectively navigate the flow of order and its impact on the Bitcoin trade:
- Exchange data monitoring : Stay updated with information on real -time orders from exchanges such as Binance, Money or Kraken.
- Use technical indicators : Use tools such as mobile media, RSI (relative resistance index) and Bollinger bands to help identify potential trends and investments.
- Note the analysis of the market feeling : Look for changes in the purchase and sale orders that could inform a change in market sensation.
- Diversify your portfolio : extend your investments in several cryptocurrencies to minimize risk.
Conclusion
Order flow is a critical factor to understand Bitcoin’s price movements (BTC), influencing its commercial dynamics.