• Bitcoin has not been this oversold since the March 2020 pandemic-induced panic episode.
  • Sentiment on the "Fear and Greed Index" shows it is at its lowest levels in a year.
  • Negative sentiment has encompassed the crypto markets as Bitcoin's social sentiment shifted to a full-on bearish outlook.
  • Bitcoin's 30-day MVRV ratio shows that short-term BTC traders are down by more than 10% on their initial investment.

Bitcoin price dropped to lows in the $47,000 zone after recording its all-time high at almost $65,000 in the previous week.

Bitcoin sell-off similar to March 2020

After panic sparked by the rumor that US President Joe Biden would be announcing a bill to increase capital gains taxes for those generating an annual income of more than $1 million, the crypto markets crashed in tandem with the stock market. 

While Bitcoin has recovered slightly since the deep plunge below $50,000, the market sentiment has shifted over the last week of price action. 

The Crypto Fear & Greed Index, which measures current sentiments across the crypto market, moved from “Extreme Greed” toward “Fear,” as most cryptocurrencies traded in a sea of red. The Index measures aspects of the market, including its volatility, trading volumes, momentum, social media sentiments and trends. 

The current levels of fear around 27 points have not been seen since a year ago when Bitcoin price action was affected by the ongoing coronavirus pandemic crisis. The low level shown by the metric indicates that investors are as worried about losing capital with Bitcoin as they were a year ago.

Crypto Fear and Greed Index

Crypto fear and greed index

Further, Bitcoin’s Network Realized Profit/Loss (NPL) on-chain metric suggests that coins moving on the blockchain are on average doing so at a loss, just ten days after Bitcoin set a record high. This dip argues that there has been a wave of panic sell-offs by short-term traders. 

Bitcoin NPL

Bitcoin network realized profit/loss

Bitcoin’s social sentiment has also dropped to a negative value as the community continues to panic over the short-term potential price action of the leading cryptocurrency. Following Bitcoin’s "peak hype," a period of consolidation and correction has started. 

According to behavioral analytics firm Santiment, Bitcoin’s social metrics point out that investors are no longer expecting new highs and a perennial bull market in the near future. The market has shifted to a bearish outlook, which indicates the anticipation of further losses and deeper corrections. 

Bitcoin social sentiment

Bitcoin social sentiment

Additionally, Bitcoin’s 30-day MVRV ratio that tracks the average profits and losses of all BTC addresses tells the story of short-term traders trading down by around 11.7% on their initial investment. 

Bitcoin MVRV

Bitcoin MVRV

The RSI metric, which calculates the balance between buyers and sellers, is almost at the lows of March 2020, indicating that Bitcoin is oversold.

Bitcoin RSI

Bitcoin RSI

Extreme bearish sentiment and oversold indicators could be pointing to short-term price bottoms, which could alleviate further selling pressure. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Can Solana price enter a 50% relief rally?

Can Solana price enter a 50% relief rally?

Solana price is in the beginnings of a quick recovery rally that could propel it back to levels that were last seen nearly two weeks ago. Two technicals back the claim for why SOL could be ready for this ascent.

More Solana News

Ethereum Price Prediction: ETH will sweep the lows at $1,500

Ethereum Price Prediction: ETH will sweep the lows at $1,500

Ethereum price displays reasons to believe in a ‘sweep the lows’ event in the coming days. Traders should approach the smart contract blockchain with caution.

More Ethereum News

Assessing the possibility of a 40% upswing for Cardano

Assessing the possibility of a 40% upswing for Cardano

Cardano price is in a spot favorable for the bulls and short-term traders as a rally might be in the works. A minor retracement will allow interested buyers an opportunity to accumulate ADA at a discount before catalyzing an explosive uptrend.

More Cardano News

Bitcoin Weekly Forecast: The last rebound before capitulation

Bitcoin Weekly Forecast: The last rebound before capitulation

Bitcoin price is showing bullish signs in the lower time frames, which can be taken advantage of by traders in the next couple of days. But looking at BTC from the highier time frames suggests that the bottom is not in yet.

More Bitcoin News

Bitcoin: The last rebound before capitulation

Bitcoin: The last rebound before capitulation

Bitcoin is showing bullish signs in the lower time frames, which can be taken advantage of by traders in the next couple of days. But looking at BTC from the higher time frames suggests that the bottom is not in yet.

Read full analysis

BTC

ETH

XRP