Currently, Bitcoin [BTC] is trading at $94.5k, having recently encountered its third rejection above the $100k level on 07 January. This has led to a sense of uncertainty among traders, with questions arising about whether this correction could signal a downward trend, possibly marking the beginning of a bear market.
Analysts noted a significant increase in crowd selling social volume on 08 January, a pattern observed previously on 04 December. Interestingly, during the last instance, Bitcoin’s price rebounded, ultimately reaching an all-time high of $108.3k.
In the aftermath of the recent 8% decline, fear has gripped the market. Speculation suggests that a dip below $92k could trigger a price recovery, along with potential market movements following the U.S. presidential inauguration. Additionally, the strengthening dollar index [DXY] in recent weeks has contributed to the challenges faced by the bulls.
Bitcoin Traders Strategy: Embrace Fear, Avoid Greed
The age-old advice, “Buy the fear, sell the greed,” still holds relevance in the current market scenario. Notably, on-chain metrics for Bitcoin show no signs of an imminent market peak.
An analysis of the sentiment for both BTC and ETH investors revealed a prevailing bearish sentiment since the price slump on 19 December, with neither asset indicating a substantial recovery to date.
Moreover, the 30-day MVRV ratios for both cryptocurrencies remained negative, indicating that short-term holders were experiencing losses. Interestingly, the 180-day mean coin age for BTC and ETH has been on an upward trend over the last few weeks.
This trend could serve as a signal to consider buying the dip. The increased accumulation and short-term holders at a loss suggest a potential reduction in immediate selling pressure, thereby increasing the probability of a market recovery.
While Open Interest had been steadily rising from November to mid-December, recent data shows a slight decline from $13.7 billion on 16 December to $11.72 billion presently.
This decrease in Open Interest indicates waning speculative interest, reinforcing short-term bearish expectations. If these short-term indicators begin to show positive signals, Bitcoin’s price recovery may already be underway.
Traders are advised to carefully assess the risks and opportunities and make informed decisions regarding entry points, particularly regarding the critical $92k support level.