Crypto traders are feeling the bearish pressure as both Bitcoin and Ethereum struggle to maintain recent gains, with several on-chain metrics reflecting a downturn in market sentiment.
Over the past week, Bitcoin has seen a nearly 7% drop, currently trading at $113,479, while Ethereum has experienced an even steeper decline of 10%, hovering around $4,269. This downward trend is not limited to just these two leading digital assets, as other top 10 cryptocurrencies like Solana, XRP, Dogecoin, and Cardano have also posted double-digit losses over the past seven days.
This sudden reversal comes as a stark contrast to the bullish optimism that was prevalent among investors just a few weeks ago. The Crypto Fear & Greed Index has dropped to 52, its lowest level since June, according to Coinperps data, reflecting the shift in market sentiment.
Further data from Santiment on Aug. 20 points to a decrease in social media sentiments surrounding Bitcoin, reaching their lowest levels since June 22 when geopolitical tensions led to panic selling. Santiment noted that retail traders have shifted their stance after Bitcoin failed to rally and dipped below $113,000.
The bearish mood in the market has also influenced trading behavior, as CoinGlass data shows that over 50% of Bitcoin positions are currently short, indicating a majority of traders expect further price declines. Meanwhile, 48% of traders have maintained active long positions in the past day.
Prediction platforms like Polymarket are increasingly assigning a 60% probability that Bitcoin could drop to $111,000 or lower, indicating a lack of confidence in a bullish reversal in the near term.
Kronos Research, a crypto research platform, attributed the market jitters to concerns over the Federal Reserve’s potential rate cut in September. According to Kronos, Federal Reserve Chairman Jerome Powell’s address at Jackson Hole remains a key factor for the crypto market, with dovish language potentially sparking a rebound while hawkish tones could trigger deeper corrections.
The rate markets currently signal a strong chance of easing, with the CME FedWatch data showing an 81% probability of a rate cut in September. This uncertainty in the broader financial landscape adds to the apprehension among crypto traders, contributing to the current bearish sentiment in the market.