Key Points
- The Bitcoin Rainbow Chart suggests that Bitcoin is currently “cheap”, but the cryptocurrency remains in a downtrend.
- The Fear and Greed Index indicates a fearful market sentiment, suggesting potential further price drops.
Bitcoin [BTC] has seen a decrease of 6.5% since the 28th of March.
Short-term holders of BTC have been selling at a loss, and the risk-adjusted returns, as indicated by the annualized Sharpe ratio, have been on a downward trend.
Impact of U.S. Tariffs and Market Sentiment
With the news of the U.S. tariffs starting on the 2nd of April, the sentiment across the crypto markets has been subdued.
The Bitcoin Rainbow Chart suggests that BTC is “still cheap”, but this should not be the sole guide for long-term investors, as the leading cryptocurrency continues to be in a downward trend.
Data suggests that the coming weeks might not be favorable for the bulls, but the second half of 2025 might be.
Fear Dominates the Crypto Market
The Fear and Greed Index has been in fearful territory since late February.
It has not crossed above the 50 mark in March and has been making a series of higher lows.
The recent dip below the 30 level suggests challenging times for investors, marking a new low since mid-March.
This drop in market sentiment coincides with wider stock market concerns.
The fearful sentiment could potentially lead to greater selling pressure, driving prices lower.
The 1-day BTC chart indicates a strongly bearish outlook in the short term.
The ongoing downtrend is confirmed by the 20DMA and 50DMA, as Bitcoin has not established a new higher high above $90k, maintaining its bearish structure.
It has also fallen below the $82.5k local support zone.
Since February, the OBV has been on a downward trend.
Although it stabilized in the latter half of March, indicating a balance of power between buyers and sellers, this only offered a slim chance of bullish recovery.
Recent selling pressure has eliminated that hope, and the OBV is likely to hit a new low in the coming days.
If this happens, Bitcoin investors should prepare for a potential price drop below $78k.
While the Rainbow Chart suggests buying, current market sentiment and price trends suggest that patience might be a better strategy.
The downtrend persists, and until it reverses, bullish investors may need to wait for more favorable conditions.
Please note, the information presented does not constitute financial, investment, trading, or other types of advice.
