‘Panic Selling’ Bitcoin holders ignited a crypto downturn.
Short term panic sellers seem to be containing the market. However, FUD drives the narrative of the worse to come. When will crypto downturn end?
The addresses that hold Bitcoin for over a year have increased to its highest level ever.
This suggests that the market downturn is fueled basically by short-term holders who panic sell to exit their position.
The latest price drop puts Bitcoin at the cliff of a new “crypto winter.” Because of that, it is now the time for extreme caution.
Market downturn ignites bear market talk
In the past seven days, the total crypto market cap fell near 30% from $2.5 trillion to $1.8 trillion.
Bitcoin has been down by 40% from its latest all-time high of $64,000 from four weeks ago. Ever since then, multiple breaks of key support levels provoked the debates of a return to the bear market.
An analyst noted that Bitcoin interacts with the 200-day moving average. A daily close below that level could be a bearish sign and probably the start of a new crypto winter.
“Fear and Greed Index is currently at fear levels. At the same time, Bitcoin is flowing further down as it is not filling big orders. Most volume is from retail activity,” the analyst wrote, adding:
Our last Order Book analysis is still valid, so our recommendation is to stay strong until that structure is broken. If this bear run continues, we may face a crypto winter.”
The Bitcoin FUD
When trying to explain the market downturn, Nathaniel Whittemore, The Breakdown Podcast’s host, pointed out the aggression of FUD lately. He continued that he assumes this is part of a larger scheme to discredit the cryptocurrency.
“Elon energy FUD. Resurgent Tether FUD. China ban FUD. Used for crime FUD. Regulatory FUD. Welcome to “and then they fight you”
Maybe the massive one from these stories is the news that authorities from China renewed their opinion to ban Bitcoin. It has been reported that three government bodies recently called on institutions but not to conduct business with other crypto companies.
It is a reminder to the public that the law does not protect cryptocurrency transactions.
Despite the precise cause, FUD events in the past couple of days bring home the dangerous nature of investing in cryptocurrency.
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