Key Points
- Bitcoin’s bullish structure failed to maintain its breakout, raising concerns of a local top.
- The Fear and Greed Index indicates that the market sentiment is neutral, not warranting panic.
Bitcoin [BTC] recently broke out from a descending channel it had been trading within since July. Despite this, the price failed to maintain its upward momentum after reaching the local high of $66.5k.
Crypto market intelligence platform Santiment noted the crowd sentiment was notably bullish, which increased the likelihood of a market top and subsequent panic selling if BTC prices dropped.
Market Sentiment and Price Drop
The nearly 5% price drop on Monday seemed to confirm this idea. The question remains: Is the market poised for recovery, or has the local top been reached?
The Fear and Greed Index, which calculates scores based on factors such as volatility, market volume, social media engagement, and Bitcoin dominance trends and Google Trends scores, indicates that market participants need not panic. The current sentiment is neutral and has been either neutral or fearful in recent weeks.
Price Action and Market Trends
The price action since June has been marked by a series of lower highs and lower lows. The most recent lower high at $65k from August 25th was breached, as were the descending channel’s highs. However, this breakout was short-lived. Within four days, BTC experienced a 4.7% correction, falling back into the range and below the $64k-$66k resistance zone.
The On-Balance Volume (OBV) has surpassed the local high from August, but not by a significant margin. The lack of follow-through from the price indicates that bulls lacked conviction in the short term and were more inclined to take profits.
The Directional Movement Index (DMI) had signaled a strong uptrend during the breakout. The +DI and ADX were both above 20, and they still are, but were falling lower. It is possible that the $60k-$61.5k support zone will be tested next.
Please note, the information presented does not constitute financial, investment, trading, or other types of advice. It is solely the writer’s opinion.