The market is back at a stage where investor psychology is likely to take the next step.
So far, crypto has remained relatively isolated from the macro FUD surrounding the West Asian crisis. However, the latest inflation figures remind us that it may be too early to call a definitive low for Bitcoin [BTC]especially after the daily close of 3.61% in the red.
In short, macro pressures are starting to seep into BTC. One of the clearest signs is the Coinbase Premium Index (CPI). The index has fallen sharply, falling by more than 106% to -0.002 in one day. In fact, this marks the sharpest decline this week, indicating waning buying pressure from US investors.
Meanwhile, the Crypto Fear and Greed Index has fallen back into the ‘fear zone’ after briefly moving to neutral, which was in line with BTC regaining the $74k level. From a technical perspective, this shift in sentiment made the recent long squeeze almost inevitable as bullish positioning faced macro headwinds.
Data from CoinGlass shows that nearly $150 million in long positions were wiped out, marking the largest liquidation event since early March. Taken together, the decline in sentiment indicators and the magnitude of long-term liquidations indicate that the market is returning to risk mode.
Against this backdrop, BTC’s sideways move around $70,000 suggests that it is still too early to call a bottom with certainty. The price is holding up, but the lack of strong positive developments shows that conviction remains weak. That said, a key CryptoQuant metric indicates that Bitcoin can still keep sentiment supportive if this correlation holds.
A critical correlation could help Bitcoin avoid extreme fear
To maintain current levels, the market needs strong risk appetite as sentiment still drives price action.
Otherwise, BTC risks losing its position, especially as macro FUD continues to depress confidence. If this pressure continues, it likely won’t take much for sentiment to return to the ‘extreme fear’ zone, especially with BTC still trading over 40% below its peak of $126,000, leaving a large portion of holders underwater.
According to AMBCrypto, the correlation between BTC and gold could play an important psychological role. Technically, Bitcoin’s push came to $74,000 ratio decreased 15%, which matches BTC’s 10.4% gain. The result? The correlation between Bitcoin and Gold reached -0.88, the lowest level since November 2022, highlighting a strong inverse relationship.
Simply put, Bitcoin’s relative strength against gold continues to serve as a key bullish signal.
From a technical perspective, the latest inflation report caused massive losses of trillions of dollars in the gold and silver sectors, yet BTC only gave up about $50 billion in market cap, keeping the decline relatively contained even as the broader FUD rattled risk assets.
This resilience therefore plays a key role in maintaining sentiment. If Bitcoin continues to show strength, capital turnover could remain robust, cementing its role as a preferred hedge for investors as macro volatility continues to shake the broader market.
In this cycle, Bitcoin’s potential bottom therefore appears closely tied to these BTC-gold dynamics, making the correlation a crucial indicator to keep an eye on as the market navigates uncertainty.
Final summary
- Despite losses of trillions of dollars in gold and silver, Bitcoin’s limited $50 billion market cap decline highlights the resilience that is helping to sustain market sentiment.
- The strong inverse relationship indicates that Bitcoin’s bottom may be closely tied to these dynamics, making it an important indicator for navigating risky conditions.