Bitcoin [BTC] is currently experiencing a challenging period in terms of its price performance, leaving investors dissatisfied. Recent data indicates a sense of fear spreading throughout the community.
Nevertheless, this market panic may hold the potential to trigger a positive turnaround for the leading cryptocurrency.
Concerns Among Bitcoin Investors
Last week, Bitcoin witnessed a significant price correction of over 11%, pushing its value below $95,000. Problems surfaced for Bitcoin as we entered the period typically associated with a market upturn known as the Santa Claus rally.
Presently, the cryptocurrency is trading at $94,078, boasting a market capitalization exceeding $1.86 trillion.
It is worth noting that despite the double-digit weekly correction, only a small fraction of Bitcoin addresses, roughly 1.98 million, were “out of the money,” representing less than 4% of the total number of Bitcoin addresses according to data from IntoTheBlock.
Notably, Santiment, a data analytics platform, raised a red flag through a tweet, indicating a further retracement in the market resulting in panic among retail traders.
Newer market participants, particularly those who joined within the past 2-3 months, are facing significant Fear, Uncertainty, and Doubt (FUD) concerning Bitcoin and Ethereum [ETH].
Historically, when retail traders sell out of panic and emotion, larger players like whales and sharks seize the opportunity to acquire more coins with minimal resistance, setting the stage for potential price rebounds.
Hence, the likelihood of a reversal in trend appears plausible as we approach the year-end.
Could Bitcoin See Positive Momentum Soon?
Analyzing data from CryptoQuant, a prevailing selling sentiment is noticeable in the market, demonstrated by an increase in exchange reserves.
Contrary to hopes, despite the potential for whales to influence a reversal by accumulating Bitcoin, transactions depicted a scenario where large stakeholders were divesting holdings last week – a troubling sign for Bitcoin’s price trajectory in the immediate future.
Meanwhile, the derivative market painted a bullish picture with the funding rate for Bitcoin on the rise.
In the context of the crypto market, an uptick in the funding rate signifies a higher cost associated with maintaining long positions, signaling growing bullish sentiment towards the asset.
Additionally, the taker buy/sell ratio showed a favorable green trend, indicating a prevailing buying sentiment within the derivatives market. If these indicators are reliable, the anticipation of a potential trend reversal for Bitcoin seems reasonable.