- Bearish sentiment across the crypto sector was on the rise.
- Bitcoin and Ethereum witnessed a decline in profitable and short-term holders.
- Traders have seemingly lost faith in the markets, with bullish calls dropping significantly.
Explore the increasing bearish sentiment in the crypto market and its implications for Bitcoin and Ethereum holders.
Bears take the lead
According to data from COINOTAG’s analysis of Santiment’s insights, there has been a significant decline in bullish sentiment on online platforms such as X, Reddit, Telegram, 4Chan, and BitcoinTalk.
This dwindling confidence has driven traders to reduce their bullish calls markedly. Although bearish calls have also dropped, the descent has been much less pronounced.
Fearful investors, once optimistic, are likely feeling pressured to divest their Bitcoin and Ethereum assets, potentially instigating a downward spiral of price depreciation.
Market Anxiety and Potential Capitulation
The compounded fear among investors may precipitate panic selling, exacerbating Bitcoin and Ethereum’s decline. Such sell-offs might culminate in a capitulation event where continued selling pressure diminishes, paving the way for market stability and an eventual price bottom for these major cryptocurrencies.
Insights into Holder Behavior
At the time of writing, BTC was priced at $61,361.69, reflecting a 0.67% drop over the past 24 hours.
During this timeframe, BTC’s Market Value to Realized Value (MVRV) ratio saw a significant dip, signaling reduced profitability for most holders alongside the dropping price.
A decrease in the Long/Short ratio further indicated a shift in market dynamics, with a rising presence of short-term holders—who are typically more susceptible to market fluctuations—compared to long-term holders.
If this trend of heightened market volatility continues, Bitcoin may face additional downward pressure over time.
Correlated Selling Pressure for Ethereum
Similarly, Ethereum may experience comparable selling pressures due to its significant market correlation with Bitcoin. Data from IntotheBlock highlighted a correlation coefficient of 0.86 between BTC and ETH at the time of report.
As of now, Ethereum traded at $3,432.61, marking a 1.37% increase in 24 hours. However, the MVRV ratio and Long/Short difference for ETH have fallen, indicating a drop in profitable addresses and a rise in short-term holders.
Conclusion
In summary, the increase in bearish sentiment coupled with the decline in profitable and long-term holders suggests a challenging period ahead for Bitcoin and Ethereum. Investors should prepare for potential increased volatility and consider strategies to mitigate risks in this tentative market landscape.
