Bitcoin has been on a tear since the beginning of the year, recouping over half of the losses incurred during the 2021-2022 bear cycle.
Last week, the world’s most popular cryptocurrency rose as high as $30,900, tapping levels seen in over 10 months and bringing a welcome relief for investors who had previously suffered significant losses. That strength was also reflected in other cryptocurrencies, including Ethereum, which has now reclaimed the $2,000 mark, partially fueled by the recently concluded Shanghai Harfork.
Notably, the global crypto market capitalization also recouped the $1 trillion market cap total of $1.18T at press time, as investors pumped money into various crypto assets hoping to make some profits. According to experts, this had been a further indication of an overall positive sentiment in the cryptocurrency market despite concerns around regulatory uncertainty that have roiled the crypto market in the past few months.
Careful, Warns Santiment
Nevertheless, even as investors continue to pile investments into cryptocurrencies for fear of missing out (FOMO), on-chain analytics firm Santiment has warned that this could portend danger.
On April 4, the firm issued a warning about the current state of the market, noting that its had noticed several divergences that have led to a temporary pause in the growth of ETH.
“These divergences suggest that the market’s appetite for risk has been relatively low, with some participants anticipating a drop, while others were waiting for the break of 32k in BTC and 2k in ETH,” the firm warned.
The firm further highlighted a similar pattern in the wealthy holder’s behaviour map, where whales have been seen reducing their BTC positions. It, however noted that the situation had begun to change following the Shanghai fork and Ether’s move above $2,000.
Santiment then noted that the market may be heading towards a top as signs of FOMO, or fear of missing out, become more apparent. According to the firm, traders should be on the lookout for indicators such as a significant increase in retail accumulations, a decrease in stablecoin holdings, and a spike in general network activities- to discern a market top.
“If these indicators are present, along with increased funding rates and a consensus among video (YouTube) “influencers” that this break represents a confirmed path towards new all-time highs (ATH), it may signal that we are approaching a market top,” wrote the firm.
At press time, Bitcoin traded at $28,065 after a 2.81% decline in the past 24 hours. According to Gareth Soloway, president and chief market strategist at inthemoneystocks, the price needs to get above the $30,500 level “to really establish that a low is in on Bitcoin”.
On the other hand, Ether was trading at $1,920 after a 1.8% drop in the past day, as per CoinMarketCap.