A Dose of Hopium Amidst the Bitcoin Market Sentiments Turning to ‘Fear’
With so much red across the crypto market, the market sentiment has taken a drastic turn.
Until yesterday, the market sentiments were of “extreme greed” with a reading around 80, on a scale of 1-100, as per Crypto Fear & Greed Index. The crypto market has been in “extreme greed” ever since late July.
But yesterday’s correction resulted in a sudden decline to a reading of 40, which translates to “fear” last seen in early July when bitcoin was around $9,100.
The sentiment makes sense, given that bitcoin nearly dropped to $10,000 level in over a month. The crash in the prices of the leading digital currency also sent altcoins in a free fall.
Overall, the crypto market cap lost $60 billion but is currently seeing a small rebound as bitcoin trades at $10,450 with altcoins making a recovery as well.
A lot of panic selling yesterday from HODLers who were quite successful in buying tops. Their strategy seems to be – buy high sell low. pic.twitter.com/ESp6Awoq0K
— whalemap (@whale_map) September 4, 2020
However, analyst Rekt capital notes, “In the bear market, BTC was in a macro downtrend with relief rallies on the way to new yearly lows. In this bull market, BTC is in an overall uptrend with small pullbacks on the way to new highs.”
Given that crypto markets were influenced by the stock market where tech stocks experienced a sharp reversal, we need to pay attention to the last trading day of the week for the US stock market and, of course, the U.S. Dollar Index, which seems to be gaining strength.
Amidst this somber mood, the popular analyst “Nunya Bizniz” shared the hopium that calls for stacking the sats in anticipation of a bullish wave.
Comparing the 2015 market structure, currently, we are retesting the descending trend line on the weekly just like we did at that time. After the successful retesting five years back, the digital asset had a rally of 8,000% into the all-time high of $20,000 in December 2017.
Also, it is nothing out of character for bitcoin to fall this much. As a matter of fact, if bitcoin drops to $8,000, even that won’t be out of the ordinary. During the past cycle, the flagship cryptocurrency had about nine such retracements, where it fell 30% to 40%.
If anything, it is a good buy the dip opportunity.