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3 Signs of Lasting Bearish Sentiment
Digital assets are facing sharp corrections after an attempted rebound with some users indicating a long-term bearish sentiment. This year, crypto asset prices have surged following huge institutional inflows into the market. While this has intensified the bull cycle, some events have drawn the lines of a creeping bearish sentiment in the market.
The recent market correction has triggered major sell-offs that have led to liquidations as traders have repositioned their holdings. For mild and sustained bearish sentiment, there are signs to watch out for. Current sentiment is widely viewed as short-term as bulls are looking forward to a price rally along the lines of historical trajectories. As
Bitcoin and other cryptocurrencies crash, here are the key points to watch out for to avoid bearish sentiment.
Massive transfers to exchanges
A bull cycle comes with high prices as most users buy assets with limited selling pressure. However, where selling signals are seen, it creates bearish sentiment among traders. Large transfers of assets to centralized exchanges are perceived as potential sell-offs while moving exchanges show signs of long-term holding. Some of the reasons include the ease of selling on exchanges. This year, large amounts of BTC were withdrawn from exchanges during high prices.
Frequent price correction
Cryptocurrencies are volatile, so some price swings are expected. However, when major assets decline in price for consistent periods, bearish sentiment may form in the market. This may also occur in persistent downward swings that take assets well below their highs. This occurred after the 2021 bull season, when Bitcoin price fell below $25,000 from over $62,000.
Mineral reserves
A look at miner reserves indicates the current market conditions to know if there is a bearish sentiment. If Bitcoin miners sell reserves, it often means that the market is falling. This is because, in a price correction, BTC Miners tend to sell assets to cover losses from declining market activity. On the other hand, miners will hold assets where there is positive momentum.
Read also: Market fluctuations push Uniswap outflows to near double digits weekly
David is a financial news contributor with 4 years of experience in Blockchain and cryptocurrency. He is interested in learning about emerging technologies and has an eye for breaking news. Keeping up to date with trends, David has written in several niches including regulation, partnerships, cryptocurrency, stocks, NFTs, etc. Away from the financial markets, David enjoys cycling and horseback riding.