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Crypto has been taking another “hit” as Bitcoin is down almost another 10% in the past 24 hours and trying to hold the $40,000 level. The combined crypto market is down 8% and is valued just below $2 trillion.
Bitcoin’s ongoing price correction extended to more than 35% compared to its all time high not too long ago of almost $65,000. Sitting at the bottom of three-month range, the broader uptrend remains intact albeit vulnerable to sharp swings and frequent drawdowns.
While it is hard to pinpoint exactly as to what caused sentiment to drop leading to massive sell-off among by “new” retail, it seems Musk’s Tweets have kicked it off. In addition, regulatory uncertainties may have added some more fuel to the fire. We have also been seeing some sort of a trend in the past months where Bitcoin price has been dropping in the second half of the month. It is further possible that retail is playing it safe and quickly exchanging their crypto back for fiat. This way they will have some spending money now that summer is coming up and covid-restrictions loosening in some parts of the world.
The drop in sentiment is confirmed by the Crypto Fear and Greed Index, a metric that measures the current sentiment in the bitcoin market. The index has fallen to “extreme fear” levels not seen since April 2020 at 21, down from the “greedy” level of 73 just a week ago.
Furthermore, according to on-chain market intelligence platform Glassnode, Bitcoin inflow on Binance spiked in the past days also confirming panic selling among retail. Binance is an exchange that mostly attracts retail traders and investors globally. Inflow on Coinbase was relatively low and the exchange has actually been recording higher new Bitcoin outflows in the past week. This is showing that institutional investors and other ‘whales’ are absorbing the retail market’s selling pressure.
Glassnode wrote in a weekly note:
“This provides further indication that the recent inflows are likely to be driven by both new market entrants (panic sellers) and potentially due to capital rotation into other crypto-assets.”
On-chain analyst and CEO of CryptoQuant, Ki Young Ju, also commented on the recent inflows and believed it is better to wait a few days until it all cools down:
MicroStrategy was not thrown off by recent events and bought yet again ‘another dip’ as CEO Michael Strategy made the announcement on Twitter:
Despite the recent uncertainties, we must not forget that Bitcoin is up over 350% compared to a year ago and is still very much on track for new highs in the remainder of the year. Price is developing according to the popular Stock to Flow model.