The cryptocurrency market is known for its high volatility and risks, and investors use various technical and fundamental indicators to make the right decisions in this wild market. However, there is another dimension to cryptocurrency trading that is often overlooked by novice investors: Slippage. For investors, especially when monitoring the Ethereum (ETH) market, the slippage indicator provides the potential to understand the volatility in the cryptocurrency market and even turn it into an advantage.
Slippage: An Effective Indicator in the Ethereum Market
In the fast-paced and high-risk cryptocurrency market, investors utilize a range of technical and fundamental indicators to make investment decisions. An additional potential tool they can use is the slippage measure in the Ethereum market. This indicator has consistently been effective in identifying trend changes in the price of ETH, the world’s second-largest cryptocurrency, throughout this year.
The term “slippage” refers to the inconsistency between the price at which a trade order is executed and the price originally requested. Slippage typically occurs in high volatility or low liquidity conditions where the price changes faster than the time required to complete the order. This inconsistency can be due to high volatility or a lack of supply in the market, and it can either benefit or harm investors. For example, if a buy order is executed at a higher price than initially quoted, it is considered high (or adverse) slippage.
Slippage in ETH Price Can be a Key Factor in Investment Decisions
Historical data compiled by cryptocurrency research firm Hyblock Capital indicates that the movement of slippage in the Ethereum market is often a precursor to trend changes. The visualized data on the chart shows the price of ETH in USDT as well as the aggregate maximum slippage representing the highest daily slippage in a single market order.
The aforementioned aggregate maximum slippage covers data obtained from major cryptocurrency exchanges such as Binance, BitMEX, Bybit, Bitfinex, Deribit, Huobi, OKX, Phemex, as well as three-month futures contracts listed on Huobi and OKX.
The data suggests that monitoring slippage in the Ethereum price can be a valuable method for investors to predict changes in price trends. However, it is important to remember that all trading indicators should be used as part of a comprehensive strategy, taking into account multiple factors in the highly volatile cryptocurrency market.
