Over the weekend, the price of Bitcoin fell again below $30,000 fueling traders' fears for a bearish continuation in the coming months.
Market sentiment is now in the balance between the fear of an extension of the bear market and the confidence of a resumption of the bull phase.
Let’s analyze the situation together
• The price of Bitcoin and the cash flows of digital investment products
• How to analyze crypto market sentiment
• Technical analysis of the price of Bitcoin
The price of Bitcoin and the cash flows of digital investment products
Bitcoin’s price dropped sharply over the weekend after Binance temporarily suspended withdrawals in BTC to its users due to strong network congestion, mainly due to the disproportionate increase in transactions on the Ordinals protocol.
Meanwhile, digital asset investment products recorded $53.7 million in outflows, marking the third consecutive week of negative sentiment for this type of asset.
If we look, however, at the data from the beginning of the year, we realize that the values are still positive for 19 million dollars in a general framework in which "Proshares etfs/USA" and "ETC Issuance GmbH" pull the wagon with flows in the market from 181,6 and 88,4 million dollars respectively.
The worst situation seems to be that of the provider "3iQ Corp/Canada" that records weekly outflows for 19,4 million dollars and outflows YTD from 207,7 million dollars.
In total, the assets managed in these investment funds amounted to 34.23 billion dollars while trading volumes are 16% higher than those at the beginning of the year.
Going into more detail we can see how Bitcoin was once again the most targeted asset by investors in this kind of regulated products, recording outflows of 31.8 million dollars last week and a total of 46 million from the beginning of the year.
In this context, Bitcoin incorporates 22.74 billion dollars or 66% of all the money invested in the asset class.
Although the outlook does not seem to be the best at first glance, US sentiment has become positive with inflows of 18 million dollars and at the same time has seen the greatest outflow in history for "short-Bitcoin" products for 23.1 million dollars.
Investors are therefore withdrawing their bets on future price reductions of BTC.
Ethereum, the second-largest cryptocurrency by market capitalization in the week, recorded lower outflows of $2.3 million in a total value managed by savings funds of $7.86 billion.
The only altcoin to have had positive flows has been Solana with 3,4 million dollars, that however introduces derisory values.
How to analyze crypto market sentiment
The price of Bitcoin moves according to different variables and logics that come into conflict with each other: one of these is undoubtedly the market sentiment.
There are several ways to analyze crypto market sentiment as well as observing the cash flows of investment products in digital assets managed by providers listed on traditional markets.
First if you want to get in touch with what is the short-term feeling of investors, the first thing to do is take a look at the "fear and greed index" which indicates on a scale from 0 to 100 investor confidence in the crypto market.
When extremely high values are recorded, it is usually time to sell and take profit, while when there is fear in the industry and the index marks values in red, there may be an opportunity to make purchases at discounted prices.
The situation at the moment seems neutral in accordance with the analysis in the previous paragraph,
It is important to remember that this type of indicator is delayed by 24 hours.
Another way to analyze market sentiment is to observe open interest changes in future markets by relating this data to the price of Bitcoin.
Open interest represents the number of derivative contracts not yet closed, given by the sum of the long and short open at a given time: This is extremely important because it helps us understand the interest of financial operators in staying in the market rather than choosing other investment venues.
The main brokers of future markets are Binance, Bybit, OKX, CME, Deribit and Bitmex.
At the moment, the total amount of contracts open on all exchanges amounts to 10 billion dollars, a figure that is about 30% higher than the values recorded at the beginning of the year, but about 15% lower than the data of mid-April.
If the total open interest were to exceed 15 billion of aggregate value we might have an extra reason to be bullish on the immediate future of this market.
Chart of open interest on futures in relation to the price of Bitcoin
The last way, perhaps the most spartan but also the most effective, to understand the market sentiment of Bitcoin and other cryptocurrencies is to observe the reaction of investors on twitter in relation to market price movements.
By first making a selection of profiles more crypto-friendly and with a followers base of at least 20 thousand units you can understand in real time what investors think.
Markets usually move against the expectations of the masses, so by spending time analyzing tweets and comments we can easily figure out which are the preferred scenarios for twitter audiences and make them choose exactly the opposite direction.
Technical analysis of the price of Bitcoin
Bitcoin is currently priced at $27,537 with a market cap of $533 billion and trading volume in the last 24 hours of $13.4 billion.
The situation on the front of technical analysis is on a point of maximum indecision, a bit as emerges from the analysis of the sentiment of traders, trapped between bullish and bearish opinions.
Prices on daily time frames fell below the moving average to 60 periods, marking the fifth consecutive daily candle in red (not yet concluded).
If there is a dump below the $27,000 support, we can probably have a steep drop, at least up to $24,000 in the short term.
This hypothesis is the most probable one at the moment, seen and considering also the bearish divergence that has been formed on the Relative Strenght Index (RSI).
Volumes are still low, with no indication of recovery that could counteract the theory of a bearish continuation in the short term.
Moreover, after the rally of the crypto market in Q1 2023, it seems logical to see a situation where traders take profits from their still open positions.
Daily Bitcoin Price Chart (BTC/USD)
On larger time frames ( weekly and monthly) the situation does not seem so disastrous and the conflicts between bull and bears could be resolved in a period of stability and laterality of BTC prices.
Waiting to discover the next macroeconomic data on US inflation and see how the issue of Bitcoin mempool clogged by BRC-token transactions will be solved20, probably the best choice to make right now is to be patient and wait for the next price movements of BTC.
Small curiosity in the conclusion of the article: the Ethereum Foundation began to sell some ETH: every time it happened in previous years, this event marked a small top of the prices of the crypto market. Be careful trader!
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Graduate in "Information, Media and Advertising", for over 4 years interested in the field of cryptocurrencies and blockchain. Co-founder of Tokenparty, a community active in spreading crypto-enthusiasm. Co-founder of Legal Hackers Civitanova brands. Consultant in the field of information technology. Ethereum Fan Boy and supporter of the oracles of Chainlink, firmly believes that in the future smart contracts will be central to the development of society.
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Grande successo per la fase iniziale di lancio del Launchpad NEMS
By Cryptonomist Editorial Staff - 10 Mag 2023
The first phase of NEMS Launchpad ended in one day and now the community is waiting for the opening of a new pool.
• First phase of the NEMS Launchpad soldout
• The Nemesis metaverse
First phase of the NEMS soldout Launchpad
To celebrate this important milestone, all readers of The Cryptonomist will be able to access the second phase of Launchpad on Cryptosmart and get a special bonus worth $ 20 in NEMS!
Alessandro De Grandi, CEO of The Nemesis, said:
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Chiliz launches new blockchain Layer-1 and aims to lead the sports industry from Web2 to Web3
Cryptonomist Editorial Staff - 10 Mag 2023