Key Points
- Bitcoin’s value has plummeted to around $80,000, marking one of the worst weeks in the crypto market’s history.
- Multiple factors are contributing to the bearish trend, including ETFs selling off Bitcoin and Ethereum.
The cryptocurrency market is experiencing significant turbulence as bearish trends intensify. Bitcoin’s value has fallen to approximately $80,000, with a 24-hour low of $78,197.
Several fundamental shifts are fuelling the bearish trend, resulting in one of the most challenging weeks for the market. The question remains: will Bitcoin bounce back?
Market Losses and Contributing Factors
In the past five days, the crypto market has lost 16% of its value. The total crypto market cap has decreased from $3.14 trillion to $2.63 trillion. Concurrently, Bitcoin’s market value has fallen from $96,264 to around $80,638.
Crypto analyst Darkfrost attributes several factors to the bearish turn of Bitcoin and the crypto market. ETFs are selling off Bitcoin and Ethereum as arbitrage strategies become less appealing. Additionally, bond yields now offer better returns with lower risk. Bitcoin ETFs have recorded consecutive outflows in the past eight days, amounting to $3.27 billion.
Amid the offloading, BlackRock has shifted its strategies to offload Bitcoin, once a significant purchaser in the market. The analyst also highlights recent accusations against Bitcoin and other centralized exchanges transferring assets to market makers like Wintermute.
Macroeconomic Influences and Market Sentiments
On the macroeconomic front, the analyst points out the impact of Donald Trump’s latest policies on trade wars, which have resulted in increased tariffs on multiple countries. This has led to growing uncertainty and negative sentiment towards risky assets like stocks and cryptocurrencies.
Despite the uncertainty, crypto enthusiasts maintain an optimistic outlook. Changpeng Zhao, the ex-CEO of Binance, recently retweeted Miles Deutscher’s tweets about Bitcoin price cycles. Deutscher, a crypto analyst, highlighted a decorrelation in Bitcoin price after halving, suggesting that the recent dip could be a decorrelation compared to previous cycles.
Crypto analyst Ali Martinez has highlighted social sentiment data from Sentiment as a potential recovery signal for the crypto market. According to Martinez, social sentiment towards Bitcoin has shifted significantly. Based on past trends, movements like this have often presented strong opportunities for contrarian traders. Currently, the weighted sentiment of total Bitcoin is down at -1.126%.
Potential Correction and Recovery
Martinez has also pointed out a potential 40% correction in Bitcoin. Based on his analysis, every negative crossover in the MACD indicator on the weekly timeframe has led to significant corrections. These corrections have resulted in pullbacks ranging from 16% to 63%, with an average correction of 40%. The current crossover has already led to a 16% pullback and could trigger a steeper correction.
However, the analyst also highlights a possible bullish recovery in Bitcoin. This comes from the 50-week moving average line that is currently standing at $74,700. Historically, this crucial dynamic average line has provided a bounce back in Bitcoin before witnessing a further decline towards the 200-week MA line.
