Cryptocurrencies were mainly lower on Tuesday after a period of extreme bullish sentiment has started to wane. After breaking above $50,000 at the beginning of this week for the first time in three months, Bitcoin slipped below $48,000 at the time of this report. And also i is down about 3% over the past day. Technical charts show that support is nearby. Which this might stabilize the pullback and keep the breakout move above $45,000.
Some analysts warned after Bitcoin failed to maintain pushing higher above the $50,000 resistance level.
“Our bullishness comes with some moderation, and we don’t expect more exponential upside breaks like what we saw at the end of 2020 into 2021.” Crypto trading firm QCP Capital wrote.
“The fear is gone for now, and the market is optimistic.” Arcane Research talked about it in a Tuesday newsletter. Bitcoin’s increase towards $50,000 pushed the crypto. “Fear and Greed” index to “extreme greed” territory this week, before the more recent decrease.
Arcane saw that other indexes offer neutral sentiment. To demonstrate, relatively low funding rates in Bitcoin futures market shows less exuberance among investors.
“Funding rates and future premiums in both BTC and ETH actually continue to be relatively low and muted,” QCP Capital wrote in a Telegram chat. “This means most of the rally has been driven by demand in physical spot rather than from leveraged speculators.”
“A euphoric market could indicate a local top and a signal to traders who want to take some chips off the table.” Arcane continued.
End of bitcoin submission?
Bitcoin’s “spent output profit ratio” (SOPR), the price at the time the cryptocurrency was sold divided by the price at the time it was originally bought – turned positive after a steep decline since January. The uplift in SOPR could be a sign that the “capitulation period has ended and the market is back on solid ground.” Coin Metrics talked about that in a Tuesday newsletter.
SOPR is a proxy for found out profit and loss for all coins moved on the Blockchain. The SOPR was negative for most of June. Which suggested that investors were selling Bitcoin at a loss. Now positive, the SOPR is currently showing that, in aggregate, holders are sitting on profits relative to their cost basis.
Blockchain data didn’t response to Bitcoin’s price rally yet, which this might point to narrowed upside. Transaction adds up are at historically low levels. Just like the previous periods when investor interest in Bitcoin waned, based on Glassnode data.
“The Bitcoin network is setting around $18.8 billion in daily volume.” Glassnode mentioned in a blog post. “This is 37% lower than at the 2017 bubble peak, and a whopping 57.6% below the peak set during the May capitulation event.”
BTC hashrate improvement
Bitcoin’s hashrate was improving from a local bottom in late June and early July, after China begins cracking down on crypto mining in the country. Based on Coin Metrics.
The seven-day moving average of Bitcoin’s hashrate stood at 127.5 exahashes per second on Monday, on August 23, up from a local bottom of 84.3 exahashes per second on July 2. Based on the data that Glassnode gathered.
“The recovering hashrate is a signal that some mining operations are starting to come back online in new locations and that the worst of the crackdown is likely over.” Coin Metrics talked about it in the notes.