Key Points
- Bitcoin’s market sentiment has been bearish with continuous rejections from local highs.
- Unremarkable Tether exchange inflows indicate potential for a deeper price drop before market entry.
Bitcoin’s market sentiment has been consistently bearish over the last four months, with the cryptocurrency facing continuous rejections from local highs.
This selling pressure shows no signs of abating and could potentially force another significant southbound move.
Bitcoin’s Halving and Market Sentiment
Bitcoin’s [BTC] 2024 halving took place on 19 April. However, the anticipated bull run has not yet materialized.
At the time of writing, the Crypto Fear and Greed Index showed a reading of 46, indicating a neutral sentiment.
Bitcoin continues to present a bearish structure on the weekly chart, setting lower highs and lower lows since late May.
This bearish view of the crypto market is further reinforced by insights into stablecoin flows.
Deeper Price Correction Suspicions
According to a CryptoQuant Insights post by popular analyst theKriptolik, there has been a significant decline in the inflows of Tether [USDT] to exchanges.
A close look at the charts revealed that the stablecoin exchange inflows are currently at a six-month low.
When Bitcoin and the broader crypto market experience a substantial price drop, stablecoin inflows tend to increase significantly.
This suggests that buyers use the dip to add to their crypto holdings.
The most recent sharp price drop occurred on 5 August when Bitcoin fell from $58.3k to $49k – a 15.9% drop. On that day, the stablecoin inflows stood at $2.9 billion.
The fact that we saw unremarkable Tether exchange inflows when BTC fell below $60k can be interpreted as alarming.
This suggests that smart money is waiting for a much deeper price drop before entering the market.
Potential for Further Price Drops
An analysis of the liquidation heatmap revealed that the next significant magnetic zones for Bitcoin would be at $48.8k and $46.6k.
There also appears to be a pocket of liquidity at $53.6k. These levels would be the targets for BTC in the event of a price drop below $56k.
A recent report warned that a drop below $56k could lead to a much deeper correction.
The bull-bear market cycle showed bearish dominance, and the findings from the Tether exchange flows reinforced this bearish view.
