🔴｜Is the direction of long and short uncertain? Don't rush, let's analyze the current market sentiment

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First, let's take a look at the performance of the top 10 cryptocurrencies by market capitalization over the past 90 days.

It is clear that in the past 90 days among the top 20 mainstream coins by market cap, only TRX and SUI have outperformed BTC, while most others are undergoing mean reversion.

This indicates that the overall market is strengthening BTC's dominance, with a large amount of capital continuously flowing into BTC, while the altcoins do not have enough to share. Most of these altcoins are also rising along with BTC's increase, but we are still some distance away from an altcoin season.

Next, I will analyze the current market environment and main sentiments from four perspectives.

1️⃣ The contradiction between market sentiment and herd behavior

Currently, most people are waiting for shorting opportunities, with “nearly 70% of positions betting on a decline.”

This phenomenon is often a dangerous signal in financial markets because highly consistent bearish sentiment can be exploited by the main players to create a counter-trend.

When market participants generally expect a decline, retail investors and some institutions tend to pile up short positions, trying to profit from price corrections. However, this consistent expectation precisely provides the main players with “hunting” opportunities. The main players may induce a short squeeze by creating false breakouts, pushing Bitcoin above 110,000 and Ethereum testing 3,000, triggering stop losses and forced liquidations, thus driving up prices.

This scenario is particularly common in the crypto market, as high leverage and low liquidity make price fluctuations easier to manipulate.

The extreme bearish sentiment in the current market may stem from the fear of heights brought by high prices, as well as technical divergence signals (such as RSI divergence, MACD death cross, etc.). However, when market sentiment is overly one-sided, it often indicates the possibility of a reversal. Historically, similar extreme sentiments (such as during the bull market peaks of 2017 or 2021) are often accompanied by the main players' counter-operation, cleansing the market before initiating a new trend.