“Bitcoin is not full-on melting, but we are seeing the first large-scale correction since the bull run started in early 2020,” said Nick Mancini, research analyst at crypto sentiment data provider Trade The Chain.
“Bitcoin is now 35 percent from it’s all time high of $64,900 in April, and it seems a combination of weakened sentiment, caused by CPI numbers, and Elon’s negative tweets are behind the recent fall,” he stated.
“We are currently noticing a near 1:1 correlation between sentiment and price action,” said Mancini, citing data compiled by Trade The Chain.
“Sentiment is currently bottoming, so we are watching for a bottoming of price action, as well.”
Jason Lau, COO of cryptocurrency exchange OKCoin, also spoke to how the mindset of investors is playing a key role in the markets.
“Bitcoin is down ~34% since hitting an all time high 34 days ago. This recent move reflects a shift in sentiment – as many have started looking at other crypto opportunities beyond BTC and spreading disinformation along the way.”
Bitcoin Has Entered ‘Sell Mode’
The “bitcoin chart is now in sell mode,” said Julius de Kempenaer, senior technical analyst at StockCharts.com.
“Over the weekend, BTC dropped below its recently formed support level at $47k. The break below this level has started a new series of lower highs and lower lows which means that the chart is now in a confirmed downtrend on the daily time frame,” he stated.
“The next level of intermediate support is between $42-43k which has already been tested today, and bouncing off it so far.”
Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC, also weighed in, describing the $42,000 level as being “key support.”
“There are no signs of downside exhaustion as bitcoin tests that level…this is more likely in two weeks by the way my overbought/oversold indicators are currently set up.”
Pankaj Balani, cofounder & CEO of Delta Exchange, offered some perspective, speaking to key support levels.
“Despite a sharp correction and BTC price trading in the support zone of $42,000-$44,000, we don’t think Bitcoin has found a floor yet,” he stated.
“Unlike the previous dips in Bitcoin – in the last 9 months – this time, we are not finding any buyers looking to bottom fish on a sharp move down. Most traders are convinced of further downside and are looking at 35000-38000 levels on BTC.”
Sean Rooney, head of research at Valkyrie Investments, also spoke to potential downside, citing information he culled from blockchain analysis.
“Traders and short-term investors should keep in mind that from a chain analytics perspective there have been large deposits of bitcoin flowing into exchanges. This could be a signal that the selling pressure has not subsided for the current downtrend and lower prices are indeed possible.”
In spite of the digital currency’s recent troubles, several market observers offered optimistic takes on its future prospects.
“Despite the negative sentiment, fundamentals look strong, with the Bitcoin’s hash rate and active addresses both recently hitting all time highs,” said Lau.
“Bitcoin’s upcoming Taproot upgrade also looks to be on track, with almost 80% of miners signaling support.”
William Noble, chief technical analyst for cryptocurrency data provider Token Metrics, also spoke to the matter, focusing on recent market history.
“I think when it comes to charts you have to think of seasonality,” he noted.
“Last year the fire was hard between late May well into August. We expect history to repeat itself,” said Noble.
“Anybody who is selling now is going to regret it later. The phrase don’t sell the dip has never been more appropriate,” he emphasized.
“Crypto is for the people. When the DeFi space wakes up, people will laugh at those who were panic selling during mid-May.”