Over the past week or so, the price fluctuations of Bitcoin have felt like an exhilarating roller coaster ride – one that I’ve found myself strapped into. And as we approach Trump’s inauguration, it seems that the volatile journey is set to continue in the coming days, making each day on the crypto market a thrilling ride.
As Bitcoin experiences a significant dip in its weekly earnings, it’s no surprise that sentiment has shifted towards pessimism among investors. Yet, this potential downturn might just prove to be a fortunate turn of events.
Bears Are Back
Following MicroStrategy’s announcement on Monday about its recent Bitcoin purchase, the leading cryptocurrency by market value surged above $100,000 and beyond $102,000 for the first time this year. Yet, the upward momentum didn’t last long, and the asset experienced a sharp decline in the subsequent days, dropping by over $10,000 at one point within just 48 hours.
On Thursday, bitcoin hit its lowest point since November 2024, dropping to $91,250 (on Bitstamp). However, the bulls managed to halt the downward spiral at this price and prevented any further fall below $90,000, despite numerous cautions issued by prominent analysts.
Clearly, after such a significant market downturn, the crowd became cautious, as the Fear and Greed Index returned to its neutral state on Friday for the first time since October. These variations in the index usually indicate a substantial shift in one direction or another and hint at a potential reversal in the opposite direction soon.
Is That Good News?
According to the analysis tool Santiment, Bitcoin (BTC) often goes against what the general public expects. In periods like the current one where retail investors are pessimistic about BTC on social media, it tends to defy these expectations by experiencing a significant price increase. Conversely, when there’s widespread optimism, Bitcoin may actually decrease in value instead.
come early December 2024, bitcoin plunged once more from around $100,000 down to approximately $90,000. However, in the subsequent weeks, the digital asset changed direction and even hit a new record high of over $108,000 on December 17th.
As a result, Santiment proposes that these recent advancements might signal yet another positive indication for the market, particularly if the public continues to exhibit such pessimism.
Over the last week, cryptocurrencies have underperformed for traders, with a noticeable increase in discussions about selling. As observed during the Q4 bull market, when sentiment turns excessively bearish, it often leads to higher prices becoming increasingly probable.
— Santiment (@santimentfeed) January 11, 2025
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2025-01-12 14:50