A recent analysis by CryptoCrypto suggests that Bitcoin [BTC] may not have hit rock bottom yet. This was evident as the long/short ratio showed a reading of 0.91 during the past 24 hours.
Market orders revealed that shorts made up 52.35% of the volume, indicating a prevailing bearish sentiment.
In a post by Santiment Insights, user Brian highlighted that high levels of negative and bearish social media activity could be an opportune moment to increase crypto investments.
Do market movements go against the popular sentiment, and what direction might the market take next?
Bitcoin Investors and Buyers Advised to Stay Calm
Data on social volume from November indicated that spikes in selling-related engagement in the crypto space were typically followed by price increases. For example, on November 12th and 13th, as Bitcoin approached $90k, there was a surge in sell calls, but the price quickly soared to $100k shortly after.
Similarly, a short-term consolidation around $95k in early December was accompanied by increased bearish activity, leading to a price jump to $102k just two days later, followed by a bullish sentiment during the correction.
A significant surge in bearish social volume was recorded on February 3rd, which was succeeded by a rapid bounce from $92k to $102k. However, the short-term trend has been predominantly bearish since then.
Despite the past week not seeing a recovery following bearish activity, the Coin Days Destroyed (CDD) metric for BTC indicated that long-term holders had moved a substantial amount of Bitcoin between February 3rd and 5th, likely for selling purposes.
The moving average showed an increase due to this movement, but overall, the CDD has been declining since mid-November. Moreover, demand growth has decreased in the past two months, suggesting an increased inclination towards selling or taking profits in recent times.
During this phase, Bitcoin has been trading within a specific range, prompting investors to question if this signifies a distribution phase rather than a consolidation preceding the next upward movement.
Another contributing factor to the prevailing bearish sentiment is the underperformance of altcoins in the market, attributed to the rising dominance of Bitcoin in the overall crypto market cap.
In conclusion, despite the market FUD indicating a need to invest more in crypto, the BTC.D chart highlights that purchasing Bitcoin could be a safer option. While overall performance of altcoins may remain weak, some individual coins may stand out.