Bitcoin [BTC] has fallen from the $72k level it reached on Wednesday, March 25. It had fallen to a local low of $65.6k on Friday, March 27, but witnessed a small increase over the weekend.
In a post on X, crypto intelligence platform Santiment pointed out that FUD is growing in retail. Social media engagement was heavily bearish and the use of fear words like “rejection” or “crash” increased.
Yet, as their data shows, it is precisely in times of retail carnage that purchasing opportunities arise. These have not seen a sustained uptrend following the trend shift to the higher time frame in October, but they do point to a recovery.
Another crypto market intelligence platform, Alpharactal, showed that the long/short ratio rose in recent days. Despite the decline of $76,000 over the past ten days, the rising long positions showed that traders were willing to take on greater amounts of risk to reach the local bottom.
This can be dangerous for short-term bulls. The increased willingness to take leveraged long positions means long liquidations are building below local lows.
This makes it more attractive for BTC to execute another long squeeze towards $64,000 or lower.
Purchasing power is sidelined and awaits clarity
Crypto analyst GugaOnChain used the falling stablecoin ratio to show that there were a large number of stablecoins on exchanges compared to their Bitcoin reserves.
The recent price drop saw the exchange stablecoin ratio against the USD drop to February lows. This indicates that BTC is structurally cheap and that there is sufficient purchasing power to absorb the dip, the analyst concluded.
As the price of BTC rises, the reserve value of the coin increases, driving the exchange stablecoin ratio USD higher. To better understand the implications, the exchange grid current is also needed.
Over the past month, net AC has been negative, indicating steady accumulation. This supports the idea that there was buying pressure despite the volatility of the past two weeks.
A new phase of negative net flows would mean holders are buying the dip, which would be a sign of confidence. With global markets reeling, Bitcoin investors may want to wait for more clarity before buying.
Final summary
- Retail sentiment was extremely bearish, but speculative traders were willing to take on additional risk and go long under these conditions.
- According to the stablecoin reserve ratio, purchasing power was high, but net flows were indecisive in the past four days.