Three indicators that the market continues to show bearish sentiment
The recent market correction triggered a massive sell-off, causing traders to rebalance their positions and even liquidate. There are a few key signs to watch for the growing bearish sentiment. Current sentiment is largely viewed as short-term, as bullish expectations are still based on increases in historical price action. As the price of Bitcoin and other crypto assets plummets, here are the key points that warn of bearish sentiment:
1. A large amount of money flows into the exchange
At the peak of a bull market cycle, most users will purchase assets as there is only limited selling pressure in the market. However, as soon as there are signs of a sell-off, traders become significantly more bearish. The movement of large amounts of assets to centralized exchanges is often seen as a potential sell-off signal, while withdrawals from exchanges show a tendency to hold for the long term. Some of these reasons include the convenience of selling assets during times of high prices. This year, as prices reached their highs, large amounts of Bitcoin were withdrawn from exchanges.
2. Frequent price adjustments
Cryptoasset prices are highly volatile, so a certain degree of price fluctuations is to be expected. However, when the price of top assets continues to fall, the market may develop bearish sentiment. This situation can occur during an ongoing downtrend that results in asset prices well below previous highs. For example, after the 2021 bull run, Bitcoin prices fell from over $62,000 to under $25,000.
3. Miners’ asset reserves
By monitoring miners’ asset reserves, you can understand the current health of the market and whether bearish sentiment exists. If Bitcoin miners start selling their reserves, it usually means the market is headed downward. This is because during price corrections, miners tend to sell some of their assets to make up for losses from reduced market activity. On the other hand, miners may choose to hold assets with a positive outlook.
