The crypto market has been hit hard over the weekend as prices from bitcoin to altcoins have plummeted. During this time, there has also been a decline in trading volume and momentum in the market. Now, with the new week, there is still a lot of skepticism in the crypto market as Bitcoin’s drop below $30,000 could mean the bear market is back in full force. Experts evaluate the latest situation in the market.
Crypto Fear and Greed Index remains neutral
Something that highlights how investors are feeling in the market is the Crypto Fear and Greed Index. This index takes into account factors such as social media sentiment, market momentum, and volatility. As a result it provides a score based on a scale of 1-100. Now, on this index, 1-25 indicates extreme fear. This shows that investors are very cautious towards the market. 26-50 is the zone of fear, but the zone where investors are less cautious. 51-75 is greed and is a region that indicates investors are more likely to invest in the market. And finally, 76-100 is the extreme greed that is usually seen in bull markets, where market enthusiasm is highest.
However, levels 48-52, where the index is currently located, are reserved for the ‘neutral’ level. At this level, investors are often under the influence of a price fluctuation or collapse. Thus, it indicates the reluctance to make further moves until a more well-defined move in the market.
Fear & Greed Index at neutral level / Source: alternative.meIf the index continues to stay in its neutral zone, it is possible for the crypto market to see prices consolidate for a while until investors are confident enough to start re-entering the market.
Could the crypto bear market be in full bloom?
As you follow on Kriptokoin.com, there is currently a sideways movement in the crypto market rather than a definite upward or downward movement. This just shows the lack of interest in the market at the moment. In other words, it does not show that the bear trend in 2022 continues.
Total Crypto Market Cap / Source: TradingViewMoreover, the total crypto market cap is still hovering over $1 trillion. This is a good sign for the market. Usually, a return to the bear market will see the total market cap drop below $1 trillion. This will only happen if BTC drops below $20,000 once again.
Unless there is such a market cap, the current trend only points to a correction from the $30,000 rise. Also, as long as BTC stays above its 200-day moving average, the bullish trend will be sustained long-term.
Bitcoin miner net flow registers sharp red increase
As noted by an analyst in a CryptoQuant post, miners are putting some selling pressure on Bitcoin while it is on the decline. An important indicator here is “miner net flow”. This metric measures the net amount of Bitcoin entering or leaving all miners’ wallets. When the metric has a positive value, it means that a net number of coins have been transferred to miners’ wallets. Also, such a trend means that these Blockchain validators are currently accumulating. This is something that can naturally mean a rise for the price.
On the other hand, negative values indicate that miners are currently transferring some of their BTC. Usually, miners transfer their coins when they want to sell them. Therefore, it is possible for negative net flow values to have downside consequences for the asset. Here is a chart showing the trend in the 30-day simple moving average (SMA) Bitcoin miner net flow over the past week.
The 30-day SMA of the metric has been quite negative recently | Source: CryptoQuantAs seen in the chart above, the 30-day SMA Bitcoin miner net flow recorded a very sharp red increase when the price of the cryptocurrency was in the middle of its decline a few days ago. During this spike, BTC was just above $28,000. However, the asset quickly dropped to $27,000 after that. The timing of these massive net outflows from miners could be a sign that it was the sale of this group that contributed at least in part to the coin’s decline.
Bitcoin miners’ rate of selling increased
The 30-day exponential moving average (EMA) Bitcoin miner reserve chart, a metric that measures the total amount of BTC currently held by all miners, also shows this rise.
The value of the indicator has dropped recently | Source: CryptoQuantThis drop in Bitcoin miner reserve a few days ago naturally makes sense. Because net flow is nothing more than a measure of changes in this metric. It’s clear from the chart that while the exits are large, it still doesn’t significantly impact the overall holdings of this group. This means that many miners are still sitting in their wallets. However, the current outflows are huge compared to the average of the last 365 days, as evidenced by the 14-day EMA Miners’ Position Index (MPI) data below.
Metric rose | Source: CryptoQuantIt seems that Bitcoin miners are currently selling more (compared to last year) than even the FTX crash of November 2022 saw. All these indicators suggest that this extraordinary selling pressure from these holders could be the reason why BTC dropped to $27,000 levels a few days ago.
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