Bitcoin Faces Decline Amid Missing 'New Greed' and Potential Pre-Halving Retrace
Summary:
The cryptocurrency market experiences a decline, with Bitcoin's market dominance slightly rising. Data indicates a lack of new interest or "new greed" in the Bitcoin market, seen in Google Trend searches and Coinbase's recent earnings report. Analysts posit that Bitcoin is at the beginning of a pre-halving retracement, resonating with past patterns. Additionally, BTC has been increasing since Jan. 22, but a swift sell-off raised concerns, and a bearish divergence forewarns potential further decline.
Today, the cryptocurrency market has experienced a downturn, with the overall market cap decreasing by 2.75%, settling at $1.90 trillion as of Feb. 21. This shift has caused Bitcoin's (BTC) market dominance to rise by 0.25% to 50.77%, revealing potential for further reductions, indicated by a technical divergence. BTC/USD daily chart. Image courtesy of TradingView. Let's delve into why Bitcoin's value is dropping.
Google Trends data indicates a lack of "new greed" or improved interest in the Bitcoin market. It shows that the search term "Bitcoin" doesn't attract much attention from regular investors. This demonstrates that despite a 109% Bitcoin growth over the past year, mainstream investors remain apprehensive.
Similarly, market data from Coinbase reflect this lack of enthusiasm in the original cryptocurrency among retail investors, according to their latest earnings report. The report shows that the retail activity from the second quarter of 2022 to the last quarter of 2023 was comparatively lower than the fourth quarter of 2020, indicating that the retail investors have not returned in force. Forecasted retail trading volume. Image via Coinbase earnings report.
The report also reveals that retail transactions, which once made up over 90% of the company's revenue, are currently responsible for just under half of its net income. Santiment, a market intelligence firm, corroborates this story by stating that, despite a spike in $BTC interest surrounding the #SEC's approval of 11 #ETFs, there is negligible "new greed" in the market. Few are rushing back into the market.
Analysts speculate that Bitcoin is currently in the initial stage of a pre-halving retrace, which tends to follow a specific pattern echoing past halvings. A post by Rekt Capital, a cryptocurrency trader and analyst, on X social network proposes that the ongoing market activity aligns with a pre-halving retrace, which has previously led to a 38% and 20% drop in Bitcoin during the 2016 and 2020 halving cycles, respectively.
The value of Bitcoin has been incrementally rising since Jan. 22, following the conclusion of the impact of the spot Bitcoin ETF approval's "sell-the-news" effect. Bitcoin's upward trend gained traction in February, hitting a two-year peak of $53,019 on Feb. 20. The quick sell-off at this point, however, raised red flags. On the BTC/USD 4-hour chart, the 4-hour RSI shows a bearish divergence prior to this decline in price. A descending divergence indicates that the bears have control and could potentially drive the price down to the 100-day EMA at $49,234 in the short run.
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Published At
2/22/2024 12:10:52 AM
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