The Emotional Rollercoaster of Bitcoin: A Sentiment Analysis to the Crypto World

  • Bitcoin sentimental analysis and what charts are telling us.
  • 200 EMA at weekly and 50 EMA at monthly are crucial for Bitcoin.

Currently, Bitcoin is trading at $25,867, reflecting a 1.47% decrease today. Over the course of this week, Bitcoin reached a low of $25,386, a downward movement that was previously discussed in our sentiment analysis here. As we navigate through September, it’s evident that Bitcoin has remained relatively stable, prompting us to wonder whether this is the calm before a potential storm.

In today’s sentiment analysis, we’ll explore how Bitcoin’s price may react to various market conditions and trader sentiment. To illustrate, let’s examine instances where Bitcoin exhibited an upward surge, only to see all those gains erased within the subsequent 1, 2, or 3 days. Historically, such scenarios have often preceded a significant sell-off in Bitcoin.

For example, when Bitcoin was trading at $30,200, a positive XRP news catalyst drove it to $31,800, but the following day, those gains were swiftly wiped out. Similarly, the recent Grayscale victory against the Securities and Exchange Commission saw Bitcoin surge by more than 6%, only for those gains to vanish within 2 days. This pattern underscores the high selling pressure in the market, with Bitcoin bulls struggling to sustain gains after positive developments. In such an environment, traders and investors must remain vigilant for news that could further intensify selling pressure in Bitcoin.

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Crucially, Bitcoin has yet to touch its previous Higher-Low level and remains above the $24,756 threshold. Maintaining this level is of utmost importance, as a breach would likely trigger a surge in selling pressure, leading to liquidations and stop-loss activations. Moreover, a breakdown at this level would confirm a structural breach and potentially mark a return to a bearish market, causing further price decline.

Currently, the 50-day Exponential Moving Average (EMA) and the 200-day EMA are in close proximity. Should the 50 EMA dip below the 200 EMA, it would signal a death cross for Bitcoin, typically a bearish indicator associated with negative market sentiment. Historical data reveals that in three out of seven instances when a death cross occurred, Bitcoin experienced a decline of more than 60%, with a 42% probability of dropping below $13,000 according to historical trends.

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The 200 EMA plays a pivotal role in gauging market sentiment. Previously, trading above the 200 EMA and retesting it was seen as an opportunity to buy, but now, having broken below and confirmed it as resistance, it is regarded as an opportunity for short selling Bitcoin. Breaking below the 200 EMA fosters negative sentiment.

Currently, we find ourselves just above the 200 EMA at the weekly level and the 50 EMA at the monthly level. These two EMAs are offering substantial support to Bitcoin, preventing a breakdown below the crucial $25,000 level.

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Historically, September has proven to be a challenging month for Bitcoin, with only two out of ten instances ending in green. The month carries a negative sentiment, with an average return of approximately -5.6% and an average monthly low of about -16%. Consequently, due to these negative sentiments, retail traders have been reluctant to participate, resulting in a four-year low in volatility and trading volume for the month. As we look to the next week, a sideways movement is expected for Bitcoin. However, should Bitcoin breach its important EMAs and the recent Higher-Low level of $25,756, a market sell-off may be on the horizon. Vigilance and careful monitoring of these critical levels and market conditions are paramount for traders and investors in this uncertain environment.

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Maintaining the crucial support at $24,756 is imperative to prevent a potential flood of selling, liquidations, and the confirmation of a bearish shift in market structure. Additionally, the proximity of the 50-day Exponential Moving Average (EMA) to the 200-day EMA presents a significant technical concern, as a death cross scenario could signal further declines, as history has shown.

The role of the 200-day EMA in shaping market sentiment cannot be understated, and its current position offers a buffer against a more severe downturn. However, the historical data for September underscores the challenges this month poses for Bitcoin, with a majority of instances resulting in negative returns and a decline in trading activity.

As we move forward, it’s essential for traders and investors to stay vigilant, closely monitor critical support levels, and remain attuned to market sentiment and breaking news developments. The Bitcoin market, characterized by its volatility and unpredictability, requires prudent risk management and a readiness to adapt to evolving circumstances. In the coming days, a sideways market is anticipated, but the potential for a sell-off looms if crucial support levels are breached. Proceeding with caution and preparedness is advisable in these uncertain times.

Charts from TradingView and Coinglass

The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.

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About the Author: Daniel