- Bitcoin lost key support levels on Wednesday.
- Bear sentiment has flooded crypto markets.
- The Fear and Greed Index drops sharply into fear territory.
This week, a wave of bad news has engulfed markets, stirring bearish crypto sentiment. Binance CEO Changpeng Zhao was sentenced to four months in prison for money laundering violations, while Bitcoin Cash proponent Roger Ver faced accusations of tax evasion. These legal troubles have clouded the sector, shaking investor confidence.
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Adding fuel to the fire, Wednesday saw the market react negatively to the Fed’s decision to leave interest rates unchanged as it strives to meet its 2% inflation target. Bitcoin tumbled below the key $59,300 support zone in response to the news, dragging the rest of the market lower and stoking fear of further downside price action to come.
Crypto Bear Sentiment Takes Hold
The Bitcoin sell-off sunk the Crypto Fear and Greed Index to 43 on Thursday, marking a 31-week low, while moving into the fear zone for the first time since late January. This metric, which gauges the overall market sentiment, has been trending downward since March 5, when it stood at a lofty 90, firmly within the extreme greed zone.
Although sentiment was still comfortably in the greed zone at 67 by the end of April, this week’s legal troubles have tanked market sentiment to its current 43 reading, indicating a degree of investor anxiety over recent price action.
Bitcoin opened this week at $63,000 and saw moderate gains on Monday, closing the day at $63,800. However, Tuesday witnessed an 8% swing to the downside, with BTC closing at $60,500. The sell-off intensified on Wednesday, as Bitcoin lost the crucial $59,300 support zone, recording an intraday low of $56,600, marking a 9-week low for the largest cryptocurrency.
Although Bitcoin breached the $59,300 support zone to fuel fears of a deeper downturn, several prominent analysts argued that such pullbacks are expected even in bull markets.
Macro Uptrend Remains Intact
Crypto bear turbulence this week has stirred talk of the end of the bull market. However, several prominent analysts maintain that the price action witnessed is natural within bull cycles.
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Analyst Rekt Capital drew parallels with past post-halving periods, stating that a similar pullback to what we are currently experiencing was last seen in 2016, inferring that the current negative price action is to be expected.
X influencer DonAlt stated, despite the heavy drawdown, “BTC holders don’t really have much reason to panic.” Trader CrediBULL Crypto echoed DonAlt’s sentiment by reminding his followers to zoom out, adding, “We could go down another 20% from current levels (not saying I think we will) and it wouldn’t change anything on the higher timeframes.”
On the Flipside
- Macro and geopolitical factors remain headwinds to a crypto market recovery.
- The 24-hour Bitcoin long-short ratio for May 2 is 0.972, an increase from 0.955 on Wednesday, indicating improving sentiment among long traders.
Why This Matters
The grip of the crypto bear is a stark reminder of the risks involved with digital asset investing.
Negative market sentiment stirs concerns over a bear market return.
Crypto Bull Run Over? BTC Weekly Close Stirs Concern
The DoJ seeks extradition of Roger Ver to face tax evasion charges.
Roger Ver Faces IRS Wrath: US Govt Sending a Message?
