Positive sentiment is falling fast in the crypto market. Bitcoin (BTC) is still below $100,000, and some are beginning to wonder if the top has already been reached. However, macro indicators suggest that this is not the case. Fade Bitcoin at your peril.
A slow roll-over from here?
A narrative is doing the rounds on social media that Bitcoin reached its peak when it hit over $109,000 in January last year. Since then, the incoming Trump administration has caused a ‘sell the news’ event, and it’s a slow roll-over from here on in.
The seventh cavalry, in the form of quantitative easing, still hasn’t arrived, and many are beginning to think that the Federal Reserve is trapped and will not be able to turn the money spigots on due to the fear of inflation breaking out again.
Many must also be thinking that with all the Bitcoin buying going on among the U.S. Spot Bitcoin ETFs, and Michael Saylor’s rebranded Strategy (formerly MicroStrategy), why is the price not rising?
To add to this, President Trump’s promise of a U.S. Bitcoin Reserve Strategy has not materialised, not that it could be actioned in such a short period of time, but it doesn’t take a lot for the average retail investor to get cold feet.
Market sentiment dipping fast
Source: Alternative.me
According to the Fear and Greed Index, positive sentiment for the crypto market is falling fast. From last month’s Extreme Greed, to last week’s Greed, to today’s Neutral, does tell a story of dissipating optimism.
So is this prevailing bearish sentiment across the whole market? No, this is a retail investor thing. This Bitcoin cycle is very different from its predecessors. The days of retail forcing the price to spike in this or that direction, are probably over. This is now a market dominated by the institutional sector.
The difference here is that probably the vast majority of retail investors need a relatively quick profit. If the market becomes difficult, many just can’t afford to wait for it to turn back up and end up selling. On the other hand, the institutions are in it for the long term. They know a gift horse when they see it.
A sideways consolidation range
Source: TradingView
The daily price chart for Bitcoin shows that the price action is continuing to traverse sideways in a range. The problem for the average retail investor is the sheer amount of volatility that is being experienced, which is forcing many to sell.
However, when one steps back and looks at the bigger picture, the top of this range was reached after a 63% move higher out of a bull flag. Of course the price is going to consolidate after such a move.
The weekly Stochastic RSI signals the top
Source: TradingView
If one zooms right out into the weekly time frame and looks at the Stochastic RSI (bottom of the chart), one can see each of the previous two bull market peaks were signalled by a topping out of the indicator lines. This was also the case for the other two bull markets previous to these.
For the current $BTC price, it should be noted that the indicator lines are on their way down to the bottom. Once there, they will signal a completely oversold position, and then when they rise back above the 20.00 level, they will signal new upside price momentum. This will then potentially take the price to its final bull market top for this cycle.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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