The overall mood in the cryptocurrency market is currently quite pessimistic. Following the LIBRA controversy and amidst President Trump’s ongoing trade disputes, the market is experiencing significant turmoil. The direction that the altcoin market is heading in seems to be causing some worry among traders.
Sentiment in the crypto market has undergone a notable shift in the past month. From maintaining levels above 60 in January, reaching a high of 84, the recent losses, especially in altcoins, have had a substantial impact on sentiment.
Although technically neutral, online interactions have predominantly reflected a bearish sentiment as well.
Tether Data Highlights Consistent Selling and Short-Term Pessimism
The number of Tether addresses withdrawing from exchanges has decreased in recent days. This metric monitors the volume of withdrawals from exchanges, which typically indicates accumulation. However, for a stablecoin like Tether, this decrease could be interpreted as a bearish signal.
This trend suggests that investors might be taking profits and reallocating them elsewhere, possibly to decentralized finance (DeFi) platforms optimistically, or to hot wallets to wait for a market dip. Usually, such withdrawals are more common during bullish periods and decline during bearish phases.
The netflow of Tether to exchanges has been consistently negative on average in the past few days. The 7-day simple moving average (SMA) showed that this metric has been negative for the third time since mid-December. Prior to December, the last negative netflow was recorded in October.
A positive netflow indicates an increased influx of the stablecoin into exchanges. This contradicts the recent decline in withdrawing addresses and suggests a stronger buying power in the market. The substantial inflows witnessed in November and early December have now been replaced by meager inflows and noticeable outflows over the recent period.
Both of these metrics confirm the prevailing bearish trend in the market, with no clear signs of a reversal in the near future.
Excluding Ethereum, the altcoin market capitalization has been fluctuating within a specific range since early December. However, the losses suffered in early February pushed it below the lower limits of the range, dropping to $920 billion. In the subsequent two weeks, TOTAL3 tested the range lows as resistance and declined further.
Examining Fibonacci levels, the 50% threshold aligns with the range lows, while a support zone around $760 billion awaits the altcoin market cap. The $822 billion level could also trigger a market response, provided that Bitcoin bulls can defend the $92k support level in the short term. Keeping an eye on the $94k level is crucial for potential BTC price reversals.