The "Key Drivers" that create significant fluctuations are factors that can cause market prices to rise sharply or drop deeply in a short period. The four main groups include:
1. Liquidity: When liquidity is low, a large order can also lead to significant price fluctuations. The crypto market is often easily swept at both ends due to the thinner liquidity structure compared to traditional securities.
2. News & Events: CPI data, FOMC, ETF, regulatory news, or hacking news can all reverse trends instantly. The crypto market reacts extremely quickly to new information.
3. Capital Flow: The inflow/outflow of stablecoins, BTC.D, or capital from large funds (smart money) determines the main trend. When capital inflow is strong, volatility increases; when capital is withdrawn, the market weakens.
4. Market Sentiment: Fear & Greed, FOMO, panic selling all create significant fluctuations. Crypto is the market most affected by sentiment.
Understanding the Key Drivers helps traders predict periods of high volatility, reduce the risk of being "stop hunted," and choose the right timing to enter trades.$BTC
