Despite the significant drawdown in April 2024, there are signs of an upcoming rebound in the Bitcoin market. This follows from report Santiment.
Bitcoin (BTC) and Ethereum (ETH) closed April with a drawdown of 14.7%, Ethereum – 17.2%. The Santiment report confirmed these figures. Among other crypto assets, experts noted the following:
- Dogecoin (DOGE) – 37%;
- XRP Ledger (XRP) – 39%;
- Aptos (APT) – 49%.
Changes in the main indicators of the top 100 crypto assets by capitalization indicator. Source: Santiment.
By sector, the largest drawdown was observed in the memcoin segment. In second place are LST assets, in third place are tokens of GameFi projects.
Changes in capitalization indicator by crypto asset sector. Source: Santiment.
Experts noted the fact that the correction in the market was predictable given the growth in Bitcoin capitalization in the period before the halving. At the same time, at the end of April, when the event had already taken place, the “buy on rumors, sell on news” phenomenon worked, the report emphasizes.
According to analysts, the growth in the Bitcoin market in October 2023 and early spring 2024 was caused by high expectations from the halving. At the same time, those who bought the first cryptocurrency at the end of March and immediately before the event were left at a loss, experts emphasized.
The media coverage of the halving dropped sharply after the event took place. This was preceded by a strong correction, which “diluted” the impression from him, the report emphasizes.
The ratio of halving coverage in the media space and the price of Bitcoin. Source: Santiment.
At the same time, according to experts, the behavior of medium and large holders in the market is cause for concern. Addresses holding between 10 BTC and 10,000 BTC (sharks and whales) have liquidated a total of 38,800 BTC since April 3, 2024.
According to Santiment experts, these investors exhibit behavior that is the opposite of what bullish advocates expect.
The report indicates that the end of April showed the peak of bearish sentiment since mid-March 2024, when Bitcoin corrected its all-time high.
This is a favorable sign, according to Santiment, since markets are moving in the opposite direction of the crowd's expectations. This dictates the expectations of experts who expect bearish sentiment to dominate in May 2024.
However, both Bitcoin and Ethereum attracted more attention after the collapse in the altcoin markets, the report indicated. The first cryptocurrency is being discussed due to a drawdown to local minimums, experts noted.
Ethereum, in turn, due to the prospect of the US Securities and Exchange Commission (SEC) refusing applications for spot ETFs based on the asset.
Experts say there is little chance of a short-term rebound in the near term. This is indicated by the fact that transactions are made mainly at a loss.
The report indicated that this meant the crowd had capitulated.
Further in the report, the MVRV metric is given – the ratio of market value to realized value. According to it, the profitability of wallets that moved coins in the last 30 days is -6.9%. For addresses where capital movements were recorded during the year, this figure is +22.9%.
At the same time, according to experts, the ideal condition for a market rebound is negative MVRV dynamics for both categories of investors.
According to the chart below, Bitcoin showed a noticeable rebound every time the MVRV metric for the first group of addresses entered the orange zone.
This indicator also indicates “underbought” for the vast majority of altcoins. Experts explained that this means an excellent opportunity to purchase those tokens that are marked in green in the diagram below.
The report separately highlights three projects: P-Network, Bella and Frax.
Experts also noted the extremely low level of transactions worth more than $100,000 and $1 million on the Bitcoin network until the end of April 2024. However, the situation has changed, which may also be a sign of a market reversal, Santiment emphasized.
According to the report, from April 6 to April 26, 2024, 1.32 million “non-empty” wallets appeared on the Bitcoin network. According to experts, this indicates that traders did not expect a quick rebound of Bitcoin to $70,000. However, growth slowed down and investors began to have doubts.
Summing up, experts noted that the crowd was obviously panicking too much. This is indicated by criticism in the media space and a huge number of transactions with a loss.
At the same time, despite the reduction in the portfolios of whales and sharks, large holders still control about 80% of the assets that they accumulated in the run-up to the halving. In this regard, the expression “whales dump” in this case would be an exaggeration, Santiment emphasized.
The chances of a subsequent rebound are quite high, but experts noted that this event will not be immediate. The report indicates that the bottom is getting closer, after which rapid growth is likely to begin.
Source: Cryptocurrency
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