Key Points
- Bitcoin’s price is experiencing a correction, sparking fear among investors.
- Despite the selling pressure, Bitcoin’s derivatives metrics suggest a potential trend reversal.
Bitcoin’s price action has been underwhelming recently, causing concern in the investor community.
Despite this, there is potential for a turnaround for the leading cryptocurrency, also known as the “king coin”.
Panic Among Bitcoin Investors
Last week, Bitcoin’s price underwent an over 11% correction, falling below $95k. This occurred as the market anticipated the “Santa Claus rally”, a historical event that usually boosts the crypto market.
At the time of writing, Bitcoin was trading at $94,078 with a market capitalization exceeding $1.86 trillion.
Interestingly, despite the significant weekly correction, less than 4% of Bitcoin addresses were “out of the money”.
Data analytics platform Santiment highlighted further market retracement at the start of the week, causing panic among retail investors.
In particular, Bitcoin and Ethereum (ETH) are experiencing significant fear, uncertainty, and doubt (FUD) from newer traders.
Potential Trend Reversal for Bitcoin
However, historical data suggests that when retail traders sell in panic, it provides opportunities for larger investors to buy up more coins, potentially triggering a trend reversal.
Despite this, selling sentiment remains dominant, with the number of Bitcoin addresses holding more than $1million declining sharply last week.
This suggests that large investors are also selling, which could cause further issues for Bitcoin.
Despite the selling pressure, the derivatives market appears bullish, with Bitcoin’s funding rate on the rise.
This indicates that the cost of holding long positions is increasing, a sign of growing bullish sentiment.
The taker buy/sell ratio is also in the green, suggesting dominant buying sentiment in the derivatives market.
These metrics suggest that a trend reversal for Bitcoin may not be too far-fetched.