• Bitcoin price is down 17% since the $73,777 all-time high recorded on March 14.
  • Subsiding FOMO coupled with growing FUD suggests a recovery in price amid more rational trading behavior and price stability.
  • Santiment analysts report soaring bear market mentions with markets known to go the other way relative to trader expectations.

Cryptocurrency market is bleeding, with Bitcoin (BTC) price leading altcoins south in a broader market crash. The elevated risk levels have bulls sitting on their hands, but analysts from Santiment say this bleed may only be cauterized right before or shortly after the halving.

Also Read:  Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Deviation looms as BTC tests bull market support band

Bitcoin price crash catalysts

Bitcoin price has been dumping since April 9. However, the slump seems to have intensified over the past few days, catalyzed by three key reasons.

  • The confrontation between Iran and Israel

In the latest development, the former Mossad intelligence chief has said that they could strike Iran's nuclear facilities. This assertion could worsen the situation not only in the conflict but also in the market as it inspired panic. Investors could intensify their flight to safety in favor of more traditional assets like gold and silver.

  • Fed Chair Jerome Powell’s recent hawkish stand

In a Tuesday announcement, Federal Reserve chair Jerome Powell indicated that the agency is still not very confident about inflation. Specifically, Powell said they could keep the interest rates higher for longer. The reversal was surprising, given the market was anticipating a rate cut in June, but now there is doubt about whether any rate cut is in sight.

  • Greed among retail traders

Retail greed has also played a role in the downtrend, seen with the way this class of traders continues to long every dip with high leverage. Even in the face of recent corrections, the funding rate remained positive, evidence of market greed.   

Trader and analyst @Ashcryptoreal on X says:

Unless and until we see a full reset or even negative funding for some time, the market could keep going sideways/down.

Read More: Bitcoin price unfazed as Fed’s hope for a pivot gets overwhelmed

Why a recovery could be looming

According to Santiment’s research, the bull market is likely in the conclusion phase after a 17% fall from the $73,777 all-time high. This assumption is based on the findings that bear market mentions are increasing.

If history is enough to go by, prices tend to go the opposite way relative to market expectations, and with the fear of missing out (FOMO) dwindling against a rise in fear, uncertainty, and doubt (FUD), the unique mix of these metrics could lead to a recovery either right before the halving or shortly after.

  

The described correlation between FOMO and FUD results in hype and speculative buying interest fading, which is a recipe for a more rational trading behavior and price stability. If these trends continue, it may indicate an upcoming positive shift in sentiment.

Either way, risk management is key in navigating market volatility influenced by these psychological factors.

Open Interest, funding rate FAQs

Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.

Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.

At the time of writing, Bitcoin price is trading for $61,277, defending against further downside as it tests the demand zone between $60,364 and $62,412. A candlestick close below the midline of this order block at $61,421 would confirm a further downtrend. 

BTC/USDT 1-day chart


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.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink social dominance surged to a six-month peak on Friday as LINK holders increased their activity. LINK traders started taking profits, on-chain data trackers show. LINK price added 6% on Friday, extending its gains from mid-week.

More Chainlink News

Binance helps Taiwan crack a virtual asset money laundering case, BNB sustains above $570

Binance helps Taiwan crack a virtual asset money laundering case, BNB sustains above $570

Binance’s Financial Crimes Compliance (FCC) department joined forces with Taiwan’s Ministry of Justice and helped resolve a case of money laundering worth NT$200 million, or $6.2 million. 

More Binance News

Bitcoin Weekly Forecast: Is BTC out of the woods? Premium

Bitcoin Weekly Forecast: Is BTC out of the woods?

Bitcoin price shows signs of continuing its uptrend, providing a buying opportunity between $64,580 to $63,095. On-chain metrics forecast a bullish outlook for BTC ahead. If BTC clears $70,000, the chances of resuming the uptrend would skyrocket.

More Bitcoin News

XRP trades steady at $0.50 as Ripple shares plan to expand services in Africa

XRP trades steady at $0.50 as Ripple shares plan to expand services in Africa

Ripple hovers close to $0.51 on Friday, above the psychologically important $0.50 level, as traders await the court ruling of the lawsuit against the US Securities and Exchange Commission and amid new commitments from the firm to expand its services in Africa. 

More Ripple News

Bitcoin: Is BTC out of the woods? Premium

Bitcoin: Is BTC out of the woods?

Bitcoin (BTC) price action in the past two days has confirmed the resumption of the bull run. However, BTC needs to clear a few key hurdles before investors can go all-in. 

Read full analysis

BTC

ETH

XRP