Crypto: sentiment has dipped to the lower half

Crypto: sentiment has dipped to the lower half

Market Overview

The crypto market retreated a further 0.4% over the last day to $2.66T, a six-week low. There is a sense that the market is slowly sinking, falling deeper below the 50-day moving average. Interestingly, cryptocurrencies are under pressure despite the positive momentum in equities. A similar divergence is observed in precious metals, where gold is rising while platinum and silver are falling. It feels as though buyers are currently focused on propping up flagship assets, while selling is spreading to more and more sectors, including cryptocurrencies. This looks like a sign of a bull market running out of steam, or of the market biding its time for a new growth trigger, as there are no longer enough fresh ideas from new buyers. 

The sentiment index has fallen to 48, its lowest level since 19 August, the day the latest rally began. All eyes are now on whether we will see a further deterioration in sentiment or whether the current downturn will attract buyers. According to the indicator’s creators, the optimal buying opportunity is the zone of extreme fear, but even localised dips can attract demand. 

Bitcoin continues its downward drift, remaining below $80K but finding short-term support from buyers near $79.5K. As a result, a triangle is forming, with a potential downward breakout. At the same time, it is clear that the market is moving slowly, awaiting signals from the Fed following its meeting on Wednesday evening, or gauging investor sentiment regarding the Anthropic IPO and big tech companies in general. 

News Background

Retail investors have almost doubled their Bitcoin deposits on Binance since April, which may indicate preparations for potential profit-taking, according to CryptoQuant. In contrast, crypto whales have been reducing the inflow of coins to the exchange for almost two months now. 

Bitcoin is repeating the pattern seen at the start of the 2020 and 2023 bull cycles, points out analyst Sykodelic. In his view, a pullback to $75K is more likely to be a test of support levels than a reversal. 

Strategy skipped its weekly Bitcoin purchase after five weeks of buying, maintaining its reserves at 848,517 BTC. Instead, the company bought back $205 million worth of STRC preference shares last week. 

For the second week running, Strive has broken its record for Bitcoin purchases this year, increasing its holdings last week by 6,182 BTC to 43,000 BTC, purchased at an average price of $82,732 per coin. The company ranks fourth among public companies by Bitcoin reserves. 

BitMine purchased a further 10,452 ETH last week, bringing the volume of Ethereum in its reserves to 6.05 million coins (4.96% of the total supply). To reach its target of purchasing 5% of the total ETH supply, the company needs to buy a further 50,000 ETH or so. 

The FxPro Analyst Team