The cryptocurrency market experienced a decline today, causing the total market capitalization to drop by 2.75% and reach $1.90 trillion on February 21st. As a result of this movement, Bitcoin (BTC) has seen an increase in market dominance by 0.25% to 50.77%. This shift suggests that there may be deeper corrections on the horizon, as indicated by a technical divergence.
Let’s explore the reasons behind the decline in Bitcoin’s price.
One possible explanation is the lack of “new greed” in the Bitcoin market. Data from Google Trends reveals that searches for the keyword “Bitcoin” show limited interest from retail investors. Despite Bitcoin’s impressive 109% growth in the last 12 months, it seems that retail investors remain skeptical.
Data from Coinbase also supports this notion, showing a lack of retail interest in the pioneer cryptocurrency. According to the company’s recent earnings report, retail activity remained low during the last quarter of 2023. A closer examination of the data reveals that retail activity between Q2 2022 and Q4 2023 remained below the statistics from Q4 2020. This further suggests that retail investors have yet to enter the market.
The report also highlights that retail transactions, which previously accounted for over 90% of the company’s revenues, now contribute to less than half of the firm’s net revenue.
Additional data from market intelligence firm Santiment reinforces this narrative, stating that while there was some interest in Bitcoin in the weeks surrounding the SEC’s approval of 11 ETFs, there is a lack of “new greed” in the market.
Another factor contributing to the decline in Bitcoin’s price is the pre-halving retrace. Analysts believe that Bitcoin is currently in the early stages of this phase, which historically follows a specific pattern. Similar to previous halvings, Bitcoin’s price seems to be following the five phases of the halving cycle. In the past, Bitcoin has experienced dips of 38% and 20% during the 2016 and 2020 halving cycles.
Furthermore, Bitcoin’s RSI (Relative Strength Index) shows a bearish divergence. Since January 22nd, Bitcoin’s price has been rising, but the RSI indicates a decrease in momentum. This bearish divergence suggests that the bears may have control over the market and could push the price towards the 100-day EMA at $49,234 in the short term.
It’s important to note that this article does not provide investment advice or recommendations. Investing and trading always carry risks, and readers should conduct their own research before making any decisions.