Bitcoin’s halving reduces the supply of new coins, which historically has led to price increases due to scarcity. However, external factors like demand, market sentiment, and macroeconomic events also significantly influence the price, so the effect isn’t always immediate.
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Arbitrage opportunities arise when a cryptocurrency is priced differently across various exchanges, allowing traders to profit from buying low on one exchange and selling high on another. These opportunities help to align prices across markets, contributing to greater price efficiency over time. As arbitrageurs take advantage of these price differences, they quickly narrow the gap, ensuring that the price of the cryptocurrency converges to a fair market value. However, the speed of these trades often requires sophisticated algorithms and can lead to higher market volatility in the short term. While arbitrage helps with market efficiency, it can also highlight inefficiencies and delays in liquidity across different exchanges.
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The RSI is a momentum oscillator that ranges from 0 to 100, helping traders spot overbought or oversold conditions. When the RSI exceeds 70, it signals that an asset may be overbought and due for a price correction. Conversely, when the RSI falls below 30, it indicates that an asset might be oversold, often setting the stage for a potential price rebound. In the highly volatile cryptocurrency market, the RSI is especially useful for identifying overextensions, helping traders time their entry or exit points more effectively.
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