This global bearishness comes close on the heels of a bullish start to 2020, but the rapid spread of the lethal Coronavirus has struck fear into the hearts of investors, leading them to flee so-called “risk-on” assets.
For Bitcoin, its status as a risk-on asset is seen while looking at investors’ sentiment, which has reached “extreme fear” levels.
Bitcoin Plummets Over 10% as Bullish Market Structure Quickly Degrades
At the time of writing, Bitcoin is trading down over 10% at its current price of $7,800, which marks a notable decline from daily highs of $8,800.
This ongoing selloff has marked an extension of that which was first incurred a couple weeks ago when BTC plummeted below $10,000, with the break below the support that had been established here being a dire sign of what was to come next.
It now appears that the benchmark cryptocurrency has found some strong support at $7,700, as buyers have so far been able to post a strong defense of this level.
Cred, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that he hasn’t seen selling pressure this aggressive in a while, although he further notes that the mid-$7,000 region does provide Bitcoin with some meaningful high-time-frame support.
“BTC: Sellers have been very aggressive. Haven’t seen so many clips of mkt orders unloaded like that in some time. Price at first meaningful HTF support (mid-$7000s weekly & monthly). HTF = can be patient. NOT buying first dip, will allow LTF structure (D1) to form first,” he noted.
$BTC
Sellers have been very aggressive. Haven’t seen so many clips of mkt orders unloaded like that in some time.
Price at first meaningful HTF support (mid-$7000s weekly & monthly).
HTF = can be patient.
NOT buying first dip, will allow LTF structure (D1) to form first.
— Cred (@CryptoCred) March 9, 2020
Investors Grow “Extremely Fearful” – is This a Bullish Sign?
Mr. Anderson, another well-respected cryptocurrency trader on Twitter, explained in a recent tweet that Bitcoin investors’ extreme fear is warranted at the moment, but that it will ultimately be capitalized on by more savvy investors.
“BTC Fear & Greed. Extreme Fear is warranted for now. But, will eventually be capitalized on. Typically, the only way out of these scenarios is to bounce out. They push until pushed back. The novice should stay on the sidelines. Pros should enjoy the volatility. Expect turbulence,” he explained.
$BTC Fear & Greed
Extreme Fear is warranted for now. But, will eventually be capitalized on
Typically, the only way out of these scenarios is to bounce out. They push until pushed back
The novice should stay on the sidelines
Pros should enjoy the volatility
Expect turbulence pic.twitter.com/oauGXi4KhK
— Mr. Anderson (@TrueCrypto28) March 9, 2020
Although sentiment can often be viewed as a counter indicator, in the near-term it is highly possible that Bitcoin will see further downside. Eventually, however, this will cause sellers to grow over-confident and over-leveraged, opening the gates for a short-squeeze and potential reversal.
Featured image from Shutterstock.