Bitcoin Faces Steep Decline: Is a Bigger Correction Coming?
After peaking at $124k, Bitcoin has dropped for five days in a row, reaching a low of $114,442 locally. As of this writing, Bitcoin was down 5% over the previous week, trading at $113,663. It may not be good for Bitcoin that futures are gradually becoming pessimistic amid this steep decline. CryptoQuant researcher Axel Adler reports that the futures market’s sentiment index for Bitcoin has dropped to 36%. As a result of this decline, the index is currently well below the bearish or neutral zone. The majority of traders are generally becoming more risk-averse and anticipating lower prices when this indicator falls below 45. Therefore, fear-driven activity is taking place in futures, which may lead to more declines.
Retail Panic Sinks Bitcoin: Taker Ratio Shows Strong Liquidation Trend
In the past, sentiment surrounding futures has been a major factor in the volatility of Bitcoin’s price. As an example, when the sentiment index reached 70% between August 11 and 14, the price of Bitcoin shot up to $123,000. Therefore, the recent decline suggests that rebounds will be offloaded, which will cause price changes. Adler predicts that Bitcoin will be at risk of declining under these conditions, possibly reaching $112k.
Retail traders are actively selling their holdings on the spot market because they are pessimistic about the futures market. The Bitcoin Taker Buy Sell Ratio has dropped for five days in a row, reaching a two-week low, according to CryptoQuant. A prolonged decline of this magnitude suggests that the majority of market players are actively liquidating their Bitcoin holdings. A decrease in Bitcoin scarcity usually indicates that more tokens are available for instant sale. Lower prices are frequently preceded by less scarcity, particularly when supply increases faster than demand.
Crypto Trader Warns: Bitcoin Faces Continued Downtrend If Retail Sells
Retailers became bearish about the futures and spot markets, which caused Bitcoin to decrease steadily. Therefore, the Stochastic RSI fell to 10, which is considered to be severely oversold. The Relative Strength Index fell to 44 at the same time. Strong negative momentum and the possibility of trend continuation are typically indicated when momentum indicators fall to such levels. However, as Adler had indicated, Bitcoin might challenge the $112k support if retail keeps selling and shorting the market.
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