Buying Opportunity? Investors Sentiment for Bitcoin and Ethereum Turns Short-Term Bearish

The recent adverse price developments for the top two cryptocurrencies by market cap have caused a mood swing among investors. Data shows that the crowd sentiment towards Bitcoin and Ethereum has dropped to extreme negativity as both assets slumped by about 10% in a few days.

Sentiment Towards BTC and ETH to New Lows

Bitcoin and Ethereum went through steep retracements in the past several days. The primary cryptocurrency failed to overcome $60,000 despite initiating several attempts, and the subsequent rejections drove it to a ten-day low of $55,500 yesterday.

ETH’s price performance seemed significantly more bullish. The second-largest digital asset reached a new ATH two days ago at $2,150. However, it also retraced heavily by losing more than $200 in the following 48 hours to a low of $1,940.

Despite recovering some ground since then, these developments have caused a massive mood swing among cryptocurrency investors. Data provided by the analytics company Santiment indicated that the general sentiment toward the two assets has “dropped to extreme negative territory.”

History shows that similar rapid mood changes could actually indicate a short-term market top or bottom. The graph above demonstrates that when the general sentiment was exceptionally high after price increases, as it happened in late January and mid-February, the trend reversed somewhat immediately.

Consequently, Santiment has classified the current negative state as a “bullish opportunity” for buyers.

Fear and Greed Says It’s Not That Bad

The Fear and Greed Index is another metric that could provide the investors’ sentiment towards the cryptocurrency field. It calculates various types of data, including surveys, social media, volatility, and volume, to determine whether the general mood is positive or negative towards Bitcoin.

The final results range between 0 (extreme fear) and 100 (extreme greed). Somewhat expectedly, the index was well in the extreme greed phase in the past few months, as BTC more than doubled its value since January 1st.

With BTC stuck beneath the $60,000 line, the index declined slightly, but it has still remained above 50 – meaning that it’s still in greed territory. This attests that the cryptocurrency space is prone to quick mood changes, which goes hand in hand with the highly volatile nature of all assets.

It’s worth noting that while prices have retraced slightly lately, BTC’s fundamentals have become even more robust. As reported earlier, Bitcoin’s network continues to increase its security as the hash rate marked yet another all-time high record.

Calm After the Strom: Bitcoin Reclaims $57K and Ethereum Above $2K (Market Watch)

Bitcoin dipped to its lowest point in over a week beneath $56,000 but has recovered some of the losses and currently stands above $57,000. Most altcoins have retraced even harder, including a double-digit price drop for the high-flying Ripple (XRP) and Ethereum briefly dropping beneath $2,000.

BTC’s Dominance Increases Despite the Drop

The past several days didn’t go all that well for the primary cryptocurrency. After failing to overcome $60,000 on numerous occasions, the asset reversed its trajectory and headed south.

Bitcoin reached $59,400 on Thursday, but its inability to sustain the upward momentum gave the bears an opportunity to push it down, which led to a $4,000 price drop in less than 48 hours.

Yesterday was an especially harmful trading day for BTC as it slumped to a low of about $55,500. This was the lowest price line since late March.

It’s worth noting that this retracement came as the South Korean kimchi premium normalized following a yearly high. As CryptoPotatoreported, such developments typically lead to a price drop.

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Nevertheless, the cryptocurrency bounced off and has regained more than $1,500 since its low. As of writing these lines, BTC stands just above $57,000.

On the positive side, the altcoin market has retraced even harder. Consequently, bitcoin’s market capitalization has recovered a little less than 1% and stands around 55% after dipping below that level yesterday.

Altcoins Deep in Red

The alternative coins were on a roll in the past week or so, registering new records. Ripple was among the best performers by adding 100% of value in that timeframe, reaching a 3-year high at over $1,10, and becoming the 4th largest cryptocurrency by market cap.

However, XRP has retraced with about 11% since yesterday, despite the company’s CEO claiming that the court hearing against the SEC went well for the payment processor.

Ethereum dropped below $2,000 but has jumped slightly and currently stands at $2,020. Binance Coin (-2%), Polkadot (-4%), Cardano (-6%), Uniswap (-2%), Litecoin (-5%), and Chainlink (-5%) are also in the red.

The situation with the lower- and mid-cap altcoins is significantly more volatile, as one could expect. Helium (-15%), Ontology (-14%), Qtum (-14%), NEM (-12%), EOS (-12%), Waves (-11%), and Bitcoin SV (-10%) have also retraced with double-digits.

On the other hand, WazurX (37%), 1inch (23%), Enjin Coin (23%), Harmony (21%), PancakeSwap (12%), Yearn.Finance (12%) and Conflux Network (10%) have gained the most since yesterday.

Bitcoin Miners Hit Jackpot as Hash Rate Peaks Again

Data from on-chain analytics provider Glassnode has reported that Bitcoin’s average hash rate hit a new all-time high this week, crossing a daily average of 178 exahashes per second for the first time in history.

Bitinfocharts confirms the record high, reporting the current hash rate at 176 EH/s. It topped 150 EH/s twice in February and has remained at these high levels for the past two months, steadily increasing.

Hashrate is often considered as computing ‘horsepower’ for the Bitcoin network and a strong sign of its security. The higher the hashrate, the harder it is to attack the network.

The bullish on-chain metrics were observed by data scientist Rafael Schultze-Kraft [@n3ocortex], who added that mining difficulty has also hit a new all-time high.

1/ A thread on #Bitcoin miner metrics.

First, some fundamentals.

Bitcoin’s average hash rate hit a new ATH yesterday – crossing a daily average of 178 exahash / sec for the first time in history.

Miners keep spinning up machines – hash rate is up only.https://t.co/SEdtQGNsT7pic.twitter.com/vIjVGyH8QC

— Rafael Schultze-Kraft (@n3ocortex) April 6, 2021

Mining Never More Profitable

The analyst noted that Bitcoin miners have been making more than $50 million per day for the past month. He put this into perspective by pointing out that a year ago, this number was around $12 million – so current earnings are a fourfold increase despite the block subsidy being cut in half in May 2020’s halving.

Miners are also now holding on to the new coins they’re minting as the net position has flipped back to green, according to Glassnode. In the run-up to the $40K price level, miners were aggressively selling off to cover their costs, but they’ve now switched back into accumulation mode.

“In fact, the Bitcoin unspent supply (BTC that has never left the original mining addresses), has started to increase again after a quick and sharp drop of around 15k BTC at the beginning of the year. More hodling than spending.”

He added that direct BTC transfers from miner to exchange wallets have been going back down significantly, and even USD-dominated miner to exchange volume has decreased despite a stable price. However, miner activity represents a tiny fraction of BTC trading volumes as a whole.

The analyst concluded that these metrics are very bullish, and miners have little incentive to cash out now or capitulate as many predicted after the halving.

Bitcoin Price Update

At the time of press, Bitcoin was trading down 1% on the day at $56,700, according to Coingecko. It is down at the same time last week by 3.4% but remains within the month-long range bound channel it has formed.

Bitcoin has not dropped below $50K for over a month, which is also a bullish sign that support is holding strong.

Bitcoin Price Analysis: Losing $4K in 24 Hours, Can BTC Hold the Critical Support Area?

Bitcoin fell by a sharp 4% so far today as it dropped as low as $55,600. The cryptocurrency had started the month with another attempt to breach the $60,000 benchmark level. Unfortunately, it was unable to overcome this resistance through the week as it set a range between $60,000 and $57,000.

Today’s price drop caused bitcoin to break beneath this range as mentioned above. As of writing these lines, and as seen on the following 4-hour chart, it is currently holding the critical support around $56,200 – $56,100, provided by a short-term .382 Fib and a 4-HR 200 moving average line.

BTC Price Support and Resistance Levels to Watch

Key Support Levels: $56,200, $55,600, $55,000, $54,675, $54,200.

Key Resistance Levels: $58,355, $60,000, $60,750, $61,781, $62,400.

Moving forward, if the bears push back beneath the current support at $56,200 (MA-200 on the 4-hour chart), the first support lies at today’s low around $55,500 (which is also a descending trend-line started forming towards the end of January).

This is followed by $55,000, $54,675 (.382 Fib), and the critical level of $54,200 (50-days MA). This last support is further strengthened by an ascending trend line that has been in play since early March 2021.

On the other side, if BTC price will hold here, the first resistance now lies at the daily MA-20 around $56,800. This is followed by $58,355 (February highs), and the crucial area of $60,000. The latter had been rejected at least 5 times over the past month.

The daily RSI has now crossed beneath the midline, indicating bearish momentum has taken control within the market, in the short term. This comes after the RSI produced a bearish divergence signal earlier in the week as we mentioned here in the previous price analysis.