Bitcoin, Ethereum Analysis: As Sentiment Analysis Tends Towards Extreme Fear

  1. According to bitfinex:

Bitcoin dropped below the $29,000 level on Thursday, as bears continued to push prices lower this week.

As a result of a second consecutive session of selling, BTC/USD fell to an intraday low of $28,708.96 on Thursday.

This drop comes after prices were trading at a level of $30,016.18 on Wednesday. However they’ve fallen by over 3% as traders still look to find a stable support point.

After hitting a recent low of $26,637, Bitcoin currently consolidates at the range between $28,593 – $31,450 in which it could potentially go lower in coming weeks.

Currently, Bitcoin sits at the low of $30,000 with buyers increasing in volume in recent hours.

Bitcoin Sentiment Analysis

Theoretically, crypto market sentiment analysis is a psychological evaluation of factors that influence the price movement of cryptocurrency. The way investors feel about a cryptocurrency can have tangible effects on the market cycles and price of a cryptocurrency.

While many traders use market sentiment analysis in investment markets, it can be particularly useful in the cryptocurrency market, Because the blockchain industry and crypto markets are still relatively small, public perceptions and sentiment can cause volatile price fluctuations.

Why Does Sentiment Analysis Indicate Extreme Fear?

The cryptocurrency is trading at just below $30,000 on Thursday, marking a 56 per cent drop from its all-time high last November, while other leading cryptocurrencies are also way down from their record highs.

The downturn has seen more than $1.5 trillion wiped from the market and led to warnings from analysts that another “crypto winter” similar to 2018 may be underway.

Bitcoin’s precarious price comes as El Salvador President Nayib Bukele hosts 44 countries on Monday to discuss the merits of the cryptocurrency and the benefits of adoption.

Eight months after El Salvador made bitcoin legal tender, several other countries appear close to adopting the cryptocurrency despite warnings from the IMF and some figures within the industry.

Another reason being,

Bitcoin and Ethereum dip below key levels

Both bitcoin (BTC) and Ethereum (ETH) have dropped below the levels they have managed to hold so well over the last few days. BTC fell below $30k, while ETH is currently trading below $2k, which analysts have blamed on the knock-on effect of a downturn with the US stock market.

According to bitfinex:

Bitcoin is trading lower today after yesterday’s steep drop in US stock prices. Spiraling levels of inflation has left global financial markets staring into the abyss as the prospect of a global recession looms large. This is leaving all assets that have benefited from more than a decade of accommodative monetary policy from central banks vulnerable to a correction as interest rates rise.

What does this mean?

The behavior of the cryptocurrency market is very emotional. People tend to get greedy when the market is rising which results in FOMO (fear of missing out). Also, people often sell their coins in (an) irrational reaction to seeing red numbers.

Extreme fear’ means that investors are very worried, but it could also mean that this is a buying opportunity. When the index indicates that investors are getting too greedy, that means the market is due for a correction.

That being said, we could see more lower lows, before the market picks momentum to the upside!.