Analytics firm Santiment’s social-media metrics suggest the crypto crowd is beginning to lean bearish.

“The masses are always wrong. Wisdom is doing everything the crowd does not do,” American poet and novelist Charles Bukowski said.

That holds true for crypto too, and the crypto crowd is beginning to lean bearish on bitcoin (BTC) – a sign the current BTC price sell-off may soon run out of steam.

“Historically, prices move in the opposite direction of mass traders’ expectations,” blockchain analytics platform Santiment said in a market insights post, adding the market could bottom out right before the halving – expected in the next two days – or shortly after.

Data tracked by Santiment shows that the number of “bull market” or “bull cycle” mentions on crypto social media has been declining since late March. At the same time, the number of “bear market” or “bear cycle” mentions steadily increased.

Santiment’s Social Trends indicator tracks chatter across Telegram, Reddit, X and 4Chan to identify keywords or topics that have sparked interest.

“According to the crypto crowd, the #bullmarket has essentially come to an end after #Bitcoin’s -16% market value drop since the #AllTimeHigh of $73,600 hit back on March 14th. At the same time, #bearmarket mentions are increasing,” Santiment said.

The number of mentions for other keywords like “buy the dip” also indicates that “hopium ” – crypto slang for hopes of a quick recovery and a continued bull run – among retail investors has faded. Historically, a decline in the “buy the dip” mentions has marked the end of downtrends.

The dwindling probability of Federal Reserve interest-rate cuts, heightened geopolitical tensions and timing for U.S. tax payments have weighed on bitcoin this month, leading to a 14% price slide.

The leading cryptocurrency by market value hit lows under $60,000 yesterday before recovering to trade near $61,200 at press time. The CoinDesk 20 Index, which measures the performance of the top 20 digital assets by market capitalization, has declined by 24% this month.

Bitcoin’s blockchain will implement its fourth mining reward halving on Friday or early Saturday, cutting the per-block BTC emission by 50% to 3.125 BTC. Several analysts, including JPMorgan, have warned of a deeper price slide following the quadrennial event, although the consensus is bullish over the long term.

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Mezo is a permissionless Bitcoin economic layer that uses a neutral smart contract infrastructure to offer a wide range of applications.

Blockchain venture studio Thesis has unveiled Mezo, a Bitcoin layer-2 network, from stealth with a $21 million fundraising round led by Pantera Capital

The fundraising also involved Multicoin, Hack VC, ParaFi Capital, Nascent, Draper Associates, Primitive Ventures, Asymmetric Ventures and Dan Held, and DCF God, Thesis said Tuesday.

Mezo is a “permissionless Bitcoin economic layer that leverages a neutral smart contract infrastructure” to offer a wide range of applications for users, Thesis said. It is designed to amplify the Bitcoin blockchain’s infrastructure and provide cheap and fast transactions by allowing users “to access applications that use Bitcoin for everything, enabling a thriving circular economy,” the venture firm said.

Mezo will go live with support from Thesis’ bitcoin-backed Ethereum token tBTC, which allows users to get bitcoin into Ethereum’s decentralized-finance (DeFi) ecosystem.

“Our goal with Mezo is to extend the Bitcoin network to bring 25% of the world’s economy on-chain – roughly in line with the size of the U.S. economy today,” Matt Luongo, CEO of Thesis and founder of Mezo, said in the release. Mezo allows users to hold their bitcoin while earning a yield for securing the network.

“Mezo means you can HODL your BTC with purpose, powering the Bitcoin economy, replacing vital online infrastructure, and unlocking the full potential of your BTC,” Luongo added.

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Reports swirled Thursday that the SEC was giving final comments to issuers and may approve multiple spot-based bitcoin ETF applications very soon.

BTC recovered almost all losses from Wednesday’s flash crash amid reports that a spot ETF approval could be imminent.

A survey showed only 39% of financial advisors expected an bitcoin ETF approval this year but 88% would be interested in buying BTC after approval.

Investors could switch focus to ether once the bitcoin ETF approved, Matrixport’s Marcus Thielen said.

Bitcoin (BTC) Thursday rebounded to $44,500 as investors shrugged off yesterday’s flash crash and remained optimistic a U.S. spot BTC exchange-traded fund (ETF) approval is around the corner.

While a Wednesday Matrixport report warning about a potential rejection may have helped trigger a quick 10% tumble in bitcoin, the majority of observers continue to expect the U.S. Securities and Exchange Commission (SEC) to approve applications, possibly as soon as Friday.

Bloomberg ETF analyst Eric Balchunas said during U.S. afternoon hours that the agency was providing final comments on the applications, with prospective issuers then to update their filings accordingly.

Shortly after, TechCrunch reporter Jacquelyn Melinek said that the SEC will soon approve multiple applications, citing sources “extremely close to the matter.”

BTC was up 4% over the past 24 hours and trading at $44,500 at press time, erasing nearly all of yesterday’s decline to below the $41,000 level.

The anticipation of spot-based bitcoin ETFs that directly hold the underlying asset have been a boon to the crypto market since Wall Street giant BlackRock filed paperwork in June to list one in the U.S. – a move soon followed by a plethora of other applicants. These vehicles are considered superior to already listed futures-based offerings and bulls are betting they will attract significant inflows to the largest cryptocurrency.

However, a survey released Thursday by Bitwise and VettaFi curiously found that only 39% of financial advisors expected a spot BTC approval this year.

Perhaps more interestingly though, the same survey showed 88% of those advisors see the spot ETF as a major catalyst and would be interested in buying bitcoin after approval. Bitwise is among those asset managers with spot bitcoin ETF applications awaiting word from the SEC.

Ether may come next

Matrixport research head Markus Thielen, author of yesterday’s report calling for a potential rejection or delayed approval, clarified Thursday in a CoinDesk podcast interview that he ultimately expects the U.S. agency to allow spot-based ETFs, but bitcoin may fall to lower prices in the coming weeks as technical indicators signal the uptrend is faltering.

Thielen also said that once spot BTC ETFs get the green light, investors will quickly switch their focus to Ethereum’s ether (ETH), the second-largest cryptocurrency, with a decision for spot-based ether ETF applications likely due around May.

“We would expect then we’re going to see some large outperformance of ETH over BTC,” Thielen predicted.

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The latest price moves in crypto markets in context for Jan. 2, 2024.

Shares of prominent bitcoin-adjacent companies rose in pre-market trading on Tuesday as the world’s largest cryptocurrency started 2024 by surpassing $45,000 for the first time in 21 months.

Bitcoin (BTC) has added more than 7% in the last 24 hours to about $45,600, the highest level since the start of April 2022. U.S.-traded companies such as crypto exchange Coinbase (COIN), software developer MicroStrategy (MSTR) – which owns a large number of bitcoin – and mining firms Marathon Digital (MARA) and Riot Blockchain (RIOT) rode the bullish momentum to show significant gains in pre-market trading.

Coinbase is up 3.7% at the time of writing, while MicroStrategy is up 8.1%. Marathon and Riot both added more than 10%. BTC’s latest surge indicates ever-increasing anticipation of a spot BTC exchange-traded fund (ETF) being listed in the U.S. A Reuters report on Dec. 30 suggested that the Securities and Exchange Commission (SEC) could notify ETF sponsors as early as Tuesday that their applications would be approved.

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The move appears to be in anticipation of the approval of spot bitcoin ETFs.

Bitcoin (BTC) is flowing from Binance to Coinbase, according to on-chain data compiled by CryptoQuant.

Since yesterday, Coinbase’s reserves have increased by around 12,000 BTC, while Binance’s have decreased by 5,000 BTC, the research firm wrote in a recent note.

“The decrease in Bitcoin reserves on Binance appears to be due to retail outflows,” Bradley Park, a Web 3 analyst at CryptoQuant wrote to CoinDesk in a note.

“The market is still nervous about the recent legal implications against Binance,” Greta Yuan, head of research at Hong Kong-based digital-asset platform VDX said in a note to CoinDesk. “In the short term, we will see more users move funds to compliant or licensed exchanges for peace of mind.”

“Coinbase has stood the test of time,” she said.

Some analysts say that Binance’s recent settlement with the U.S. Department of Justice was the last hurdle to getting approval for a spot bitcoin ETF, and that is also affecting fund flows.

“With this plea deal, the expectations for a spot Bitcoin ETF might have increased to 100% as the industry will be forced to follow the rules that TradFi firms must follow,” crypto services provider Matrixport wrote.

CryptoQuant identified a 1,000 BTC withdrawal from Coinbase, and Park suggested the transaction was an “institutional over-the-counter (OTC) trade and can be seen as anticipation of approval of ETFs.”

CryptoQuant data shows that exchange reserves of bitcoin have been steadily decreasing throughout the year, which is considered to be a bullish sign. However, some analysts say that since last year’s collapse of FTX, trust in centralized exchanges has diminished and investors are keeping their holdings elsewhere.

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Saylor’s business software company, MicroStrategy, held more than 158,000 bitcoins as of Friday.

The surging price of bitcoin (BTC) has pushed the asset’s largest public holder, business software company MicroStrategy (MSTR), to unrealized gains of over $1.1 billion, 25% more than their cumulative investment.

Bitcoin holdings at the company founded by Executive Chairman Michael Saylor, who often tweets his support for the largest cryptocurrency, reached $5.7 billion late on Thursday as the price crossed $37,000 for the first time since May 2022.

The company holds over 158,000 bitcoins, a position it acquired over a three-year period by investing company funds and proceeds from bond sales. The value of the holdings is now equal to over 80% of MicroStrategy’s $7.1 billion stock market capitalization.

The cost for these holdings is a cumulative $4.6 billion, data from Bitcoin Treasuries show. That’s more than 10 times larger than the next biggest institutional holder, bitcoin miner Marathon Digital, which has 13,000 bitcoins worth $500 million at current prices.

MicroStrategy’s most recent publicly known purchases came in the weeks ahead of Sept. 24, when it added 5,445 bitcoins for just under $150 million, or an average price of $27,053 each.

Bitcoin has surged recently amid optimism U.S. regulators will approve exchange-traded funds (ETFs) that hold BTC, a move some experts believe will prompt a flood of investment into the foremost cryptocurrency.

Those expectations increased Wednesday following a CoinDesk report that the Securities and Exchange Commission has opened talks with Grayscale Investments on the details of the company’s application to convert its bitcoin trust, known as GBTC, into a bitcoin ETF. Grayscale is owned by CoinDesk’s parent, DCG.

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A break below the average would call into question the bull market’s strength, one analyst said.

Bitcoin (BTC) has come under pressure of late amid weakness in technology stocks and an uptick in bond yields. The pullback has some analysts focusing on a key average of bitcoin’s price for cues about the next possible move in the cryptocurrency.

The leading cryptocurrency by market value traded at $27,400 at press time, down 11% from the ten-month high of $31,000 reached on April 14, CoinDesk data show. The decline has brought attention to bitcoin’s 50-day simple moving average (SMA), currently at $27,244.

According to Alex Kuptsikevich, senior market analyst at FxPro, a potential violation of the 50-day SMA support would challenge the bullish market sentiment.

“The market has erased its previous growth momentum and is now testing the strength of the medium-term uptrend in the form of the 50-day moving average,” Kuptsikevich said in an email. “A break below this would call into question the bull market’s strength, while a consolidation below $26,600 could be the prologue to a more profound decline.”

The 50-day SMA is one of the most widely-tracked technical lines in traditional markets and cryptocurrencies. Crypto analysts have previously tracked crossovers above/below the key average to confirm bullish and bearish trend changes.

Sellers tired to penetrate the 50-day SMA on Monday but failed. If the breakdown happens, the focus would shift to the next support at $25,200 – the level that capped the upside between August 2022 and February 2023, as seen in the weekly chart above.

According to Katie Stockton, founder and managing partner at Fairlead Strategies, the SMA support may be fleeting and could soon pave the way to a deeper decline.

“Bitcoin is testing the 50-day SMA, a minor level where short-term oversold conditions should generate a brief pause before bitcoin resumes lower toward key support (~$25,200),” Stockton said in a note to clients late Monday.

Oversold conditions illustrate a notable and consistent downward move in price over a specified period of time without much pullback. Technical analysts use indicators like the relative strength index and stochastic to gauge overbought/oversold conditions over different time frame charts (daily, weekly, hourly).

That said, if the SMA continues to hold ground, a new leg higher consistent with the broader bullish outlook will likely resume.

“The recent breakout [March move above $25,200] and positive weekly MACD support a bullish intermediate-term bias, with next major resistance near $35,900,” Stockton noted.

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Rising bitcoin prices mean a stronger balance sheet, higher stock prices and easier debt repayment, without the company needing to sell its holdings, the report said.

Whether MicroStrategy (MSTR) sells its bitcoin (BTC) tokens to pay down debt is closely tied to how the cryptocurrency performs. The position is not large enough to distort prices but it does present a sentiment risk in a down cycle, Bernstein said in a research report Wednesday.

The business analytics software company is the largest corporate holder of bitcoin as a balance sheet treasury asset, owning around 140,000 BTC at an average cost of $29,800. The stash is worth about $4 billion at current prices, the report said.

The company has about $2.2 billion in debt, with repayments due in 2025 and beyond. It has pledged 15,000 of its bitcoins, Bernstein said.

“High BTC prices mean a stronger balance sheet, higher stock prices and easier debt repayment without selling its BTC holdings,” analysts Gautam Chhugani and Manas Agrawal wrote.

MicroStrategy holds around 0.7% of total bitcoin in circulation, representing about 20% of daily average traded volume in spot markets, the note said.

At those levels, MicroStrategy does not “necessarily pose a concentration risk” even if trading volumes fell during a bear market, though it may affect market sentiment.

“The potential liquidation of MicroStrategy’s BTC during bear markets creates an overhang for BTC in a down cycle,” it said.

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The drop – with no immediate apparent catalyst – flushed millions of dollars worth of futures positions.

Bitcoin (BTC) slid more than 3% in just 15 minutes in European morning hours on Wednesday, taking the largest cryptocurrency by market capitalization below $30,000. Further declines took it as low as $29,000, CoinDesk data shows.

While the sell-off did not appear to stem from any immediate fundamental reason, an unexpectedly high U.K. March inflation figure of more than 10% may have influenced market sentiment. Also in the mix: A so-called long squeeze. More than $25 million in bitcoin futures were liquidated – of which longs, or bets on rising prices, made 98% of the positions.

“The hotter-than-expected U.K. CPI may have weighed over risk assets, including BTC. But the gravity of the reaction has been far far more severe than in other asset classes,” Vetle Lunde, a senior analyst at K33 Research, told CoinDesk.

“Seems to be more of an leverage wash out. Binance OI in BTCUSDT perps fell 5.1% in 15 minutes, effects more severe in ETH with larger liquidation volume than BTC,” Lunde said, referring to open interest, or the total number of contracts in the futures market.

Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of their initial margin. It happens when the investor is unable to meet the margin requirements for a leveraged position, they don’t have sufficient funds to keep the trade open.

Large liquidations can signal the local top or bottom of a steep price move, which may allow traders to position themselves accordingly.

The slide led to a sell-off in the broader crypto market, with Ether (ETH), polygon (MATIC) and dogecoin (DOGE) falling 5.3% in the past 24 hours and solana (SOL) losing nearly 9%.

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Bitcoin’s dominance rate, its share of the crypto market, has risen to the highest in almost two years, while ether’s stagnates.

Ethereum’s highly anticipated Shanghai upgrade, also called the Shanghai-Capella hard fork, is set to occur Wednesday, after which users will have access to the $31 billion worth of ether (ETH) staked in the blockchain since December 2020.

The upgrade has been widely hailed as long-term bullish for Ethereum’s native token. Still, bitcoin (BTC), not ether, is outperforming the broader crypto market and becoming more dominant as the upgrade approaches.

Bitcoin’s dominance rate, which measures the largest cryptocurrency’s share of total market valuation, rose to 48.5% early Tuesday, the highest since July 2021, according to data tracked by charting platform TradingView. The metric has risen by 15% this year.

Ether’s dominance rate remains stagnant between 19% and 20%. That compares with a rise to 21% from 14% in the weeks before September’s pivotal upgrade known as the Merge. That technological overhaul replaced Ethereum’s at-the-time energy-intensive proof-of-work mechanism of verifying transactions with a proof-of-stake system and set the stage for Shanghai. Staking involves depositing coins in the blockchain to boost the network’s security and verify transactions in return for rewards.

Investor caution in pricing ether ahead of Shanghai stems from several factors, including concerns tokens unlocked after the upgrade will flood the market, and regulatory issues.

“The Shanghai upgrade will unlock over 18 million ether staked since late 2020. The market is worried that the unlocking may bring about a sell-off, causing uncertainty in the market,” Griffin Ardern, a volatility trader at crypto asset management firm Blofin.

While the upgrade will unlock over 18 million ETH, only partial withdrawals of 1.1 million ETH – the coins earned as staking rewards – will be withdrawable immediately.

Analysts have recently said that the partial withdrawals will take several days to process and the resulting selling pressure is unlikely to be significant.

“If all partial withdrawals are attempted just after the Shapella fork (which seems highly improbable), it would take around four and a half days for these ETH profits to enter the market,” Lucas Outumuro, head of research at IntoTheBlock, said in a note published Friday.

According to Outumuro, full withdrawals representing most of the ETH staked will take longer.

“It would take approximately 100 days for one-third of validators to exit if they all attempt to exit simultaneously, translating into $80-$100M worth of ETH being withdrawn per day. This would make up about 1% of ETH’s daily trading volume, though it is unlikely that all withdrawals will be sold,” Outumuro noted.

The market, however, is not convinced, as evident from ether’s underperformance relative to bitcoin and ether put options, or bearish bets, drawing higher prices than call options.

Regulatory concerns are probably also weighing on investors. In February, the U.S. Securities and Exchange Commission (SEC) alleged that Ethereum staking services offered by centralized exchanges amount to selling unregistered securities in the U.S.

“ETH faces relatively higher regulatory risks. The SEC has repeatedly stated that ETH is a security rather than a commodity, which differs from the CFTC’s opinion and means additional risk, so investors understandably prefer BTC,” Ardern said. The CFTC is the agency governing the futures market.

Lastly, recent banking sector instability in the U.S. and the resulting sharp repricing of interest-rate expectations lower worldwide has benefited bitcoin. The cryptocurrency has evolved as a macro asset in the past three years and has a history of drawing haven bids during banking crises.

“BTC got the store-of-value narrative back after multiple U.S. banks failed in mid-March. Since then, BTC’s dominance rate has been rising,” Dubai-based crypto analyst and trader Reetika Malik said. Dominance rate is now at a “multiyear resistance” that has capped the upside in the past, meaning ether and other coins could soon outshine bitcoin, per Malik.

“By being concerned, the market is actually ‘pricing in’ already any selling pressure that we are likely to get from the Shanghai hard fork and the upgrade could actually become a ‘buy the news’ event,” Malik said. “BTC dominance chart is at a multiyear resistance as well as we speak. All the stars are aligning for a rotation into ETH.”

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