Majority of the market follows BTC
The start of the new year posed high fear and uncertainty in the crypto market. Bitcoin experience a downward trend in its price action ever since its all time high of above US$65,000. BTC is currently falling short within the range of US$40,000 and US$50,000 over the past month.
The fear and greed index currently sits in Extreme Fear, which could be a sign that investors are too worried. This could be a tell-tale sign of liquidation or a potential buying opportunity.
BTC Dominance currently is at 40.85% and stabilizing around US$41,000 in price, down 8.7% over the past week. Analysts expects price to move sideways, although it may be vulnerable for further decline if technical support levels are breached.
BTC’s price action is what most investors are looking at now, as altcoins will respond proportionally.
The sentiment of the bears
Most traders are bearish at the moment, suggesting dumps and liquidation will continue to occur in the market.
Key levels for BTC and ETH are at US$40,000 and US$3,000 respectively. When these technical levels are breached, alt coin prices are expected to dump deeper than the fall in BTC.
Crypto Trading Company, QCP, is short on the market and might be even more bearish when BTC falls below US$40,000. BTC under US$40,000 will herald the ‘deepest market fear’ — which has yet to come.
The company also stated the possible cap on the all-time highs (ATH) of BTC and ETH as a result of central bank tightening.
The founder of The Daily Gwei and ethhub.io, took to his audience on twitter in Ethereum’s possible nuke when he gave comparison to its performance in the previous bear market.
However, Ethereum has too much network effect for such gravity in pull back,
Some bears also predicted a potential low for BTC’s dominance, leading to a price bounce for bitcoin against the alts. This would hurt alt holders as dumps on the alt coins are known to be greater in relation to BTC’s dump.
The sentiment of the bulls
Three Arrows Capital (3AC), is a cryptocurrency hedge fund company founded in 2012 by Su Zhu and Kyle Davies. It is a strong advocate in investing in layer 1 and 2 solutions, notably BTC, ETH, AVAX, LUNA and SOL. The company is bullish in the DeFi space along with a strong conviction in recently added $NEAR protocol and NFTs as investments.
It predicts an incoming layer 1 supercycle where billions would be raised by venture capitalist who are pouring into dApps and L1 securities.
It also foresees that digital assets will be a strong hedge against inflation, with $BTC not dying anytime in the future. Instead, to “rise like a phoenix from the ashes”.
Another bullish sentiment came from the prediction of founder/CEO of DCG (Digital Currency Group), Barry Silbert. He predicted that there will be new capital inflows from whales waiting to scoop floor prices of BTC.
This action could signal the reversal in the current downward trend of BTC with larger institutions adopting BTC as a storage of wealth
@BigCheds on twitter also gave bullish comments on his $BTC thesis. His technical analysis over the past 3 months played out chronology expects to see BTC reaching US$100,000 in 2022.
(1) Introduction of BTC ETF,
(2) Pumping of BTC to its ATH,
(3) Dump to US$40,000-42,000 level (current postion)
(4) Creation of an ascending triangle to US$100,000.
More BTC bullishness came from Hyblock Capital, which published this chart showing a lack of interest between the mid US$40,000 and high US$40,000.
How the market fell through quickly within the price range of US$46,000 to US$43,000, the reversal may have the same effect in ripping straight up through the same range for a bullish price action.
Conclusion in the January market sentiment
The extreme fear from the recent market tank created two different and varying camps. On one end, sceptical traders believe the bear winter is approaching. The bullish camp believes a healthy correction is a stepping stone to BTC reaching US$100,000.
Regardless of the crypto environment being uncertain or an euphoric moment, no one would and can predict anything.
However, market sentiment might be able to provide a holistic view on the entire cryptocurrency market, possibly translating into better chances in successful strategies. The market after all, is a snapshot of the supply and demand in which are heavily influenced by psychology.
Featured Image Credit: Chain Debrief