Bitcoin's weighted sentiment has been negative for the past three weeks, coinciding with a 10% drop in price from $73,750 to $66,572. On-chain indicators suggest a possible further decline, including a taker buy-sell ratio below the zero line since March 8th and a recent sell signal from the NVT Golden Cross.
Bitcoin's Downward Trajectory: Sentiment and On-Chain Indicators Signal Further Decline
Bitcoin (BTC), the world's leading cryptocurrency, has been facing relentless bearish pressure in recent weeks. Its weighted sentiment, a gauge of market sentiment, has remained negative for the past three consecutive weeks, casting a pall over the asset's prospects. This bearish sentiment, which took hold on March 14th, has coincided with BTC's price tumbling from its all-time high of $73,750.
Historical data reveals a notable pattern: BTC's price often deviates from crowd expectations. When market participants are overly optimistic and anticipate a sustained rally, BTC tends to correct downward. Conversely, when sentiment is pessimistic and the market expects further decline, BTC has been known to initiate an uptrend. This pattern has been evident even in recent times.
On April 4th, BTC briefly surged above $69,000 before retracing to the $66,500 zone. With new resistance established at $69,000, on-chain data suggests the possibility of a further decline in the short term.
Firstly, BTC's 30-day taker buy-sell ratio, which measures the ratio between buy volume and sell volume in the futures market, has been below 1 since March 8th. This indicates a preponderance of sell volume, suggesting that more traders are seeking to unload their BTC holdings than acquire them. As long as sentiment remains bearish, this trend is likely to persist, exerting downward pressure on BTC's price.
Furthermore, pseudonymous CryptoQuant analyst Tugbachain recently reported that BTC's NVT Golden Cross, which compares the 30-day moving average of the coin's network value to transactions ratio with its 10-day moving average, flashed a sell signal at the end of March. This indicator generates a long signal when it returns a value less than 1.6, and a short signal when it exceeds 2.2. According to Tugbachain, the NVT value reaching "3.17" levels in late March, when BTC's price was around $71,000, served as an indication of a local peak.
In conclusion, BTC's negative weighted sentiment, combined with bearish on-chain indicators, points to the possibility of further price decline in the short term. However, it is crucial to note that the market is prone to unexpected fluctuations and reversals. Investors should exercise caution, conduct thorough research, and manage their risk exposure accordingly.
