Bearish sentiment is on the rise in the cryptocurrency industry as both Bitcoin and Ethereum experienced a decline in profitability and short-term holders.
According to an analysis by AMBCrypto using Santiment data, bearish sentiment is increasing in the cryptocurrency industry.
Bearish Leap
Data shows a sharp decline in bullish sentiment on online forums such as X, Reddit, Telegram, 4Chan, and BitcoinTalk.
Traders seem to have lost confidence in the market as the bullish voices have significantly decreased. Interestingly, the bearish sentiment has also declined, but at a much slower pace.
Previously bullish fear investors are now more likely to sell their holdings, thus exerting downward pressure on the prices of Bitcoin (BTC) and Ethereum (ETH) in the short term. This could trigger a domino effect as others panic sell, further exacerbating the decline.
However, the substantial decline in bullish calls could also indicate capitulation, where investors have exhausted their hope and are forced to sell.
The selling pressure may eventually weaken, leading to a period of consolidation and potentially marking the market bottom for BTC and ETH.
The Tale of Two Holders
At the time of writing, BTC is trading at $61,361.69, experiencing a 0.67% decline in the past 24 hours.
During this period, BTC’s MVRV ratio has significantly decreased. The decline in the MVRV ratio implies that the profitability of most holders has also declined as the price has risen.
Additionally, BTC’s long/short ratio has also decreased. The decline in the long/short ratio suggests that the number of long-term holders has decreased compared to the influx of short-term holders into the market.
These short-term holders are unreliable and may be heavily impacted by market volatility. If the volatility persists, BTC may face greater downward pressure in the long run.
Furthermore, Ethereum could also face significant selling pressure, as it has a close correlation with Bitcoin. Data from IntotheBlock shows a correlation of 0.86 between these two tokens at the time of writing.
Read about Ethereum (ETH) price predictions for 2024-25.
In terms of price, ETH is trading at $3,432.61, experiencing a 1.37% increase in the past 24 hours.
ETH’s MVRV ratio and long/short ratio have also decreased, indicating the number of profitable addresses and short-term holders.