Cryptocurrency analytics company Santiment has assessed the current state of Bitcoin in its latest report. Here are the details.
Cryptocurrency analytics company Santiment, in its weekly market review, stated that following the sharp declines in Bitcoin and altcoins, some on-chain indicators are beginning to point to a possible recovery. While noting the increasing losses of investors and the negative market sentiment, the company added that it is still too early to speak of a definitive bottom.
According to data shared by Santiment, Bitcoin has lost approximately 9% of its value in the last week, falling to the $67,000 level. Ethereum, meanwhile, dropped by about 13%, falling below $2,000. During the same period, XRP lost 13.5%, Uniswap approximately 16%, and Quant over 16% of its value.
The total value of the cryptocurrency market fell by over 9% in seven days to $2.94 trillion, while trading volumes increased by 30% compared to the previous week. Santiment noted that despite the increased trading volume, cryptocurrency discussions on social media decreased.
Santiment: Fear Grows Among Investors
According to Santiment’s social media analysis, the ratio of positive to negative comments in the cryptocurrency market has decreased significantly in the last two months.
On September 14th, there were 1.6 positive reviews for every negative review, while the latest data shows this ratio has dropped to 0.73. In other words, there are approximately four negative reviews for every three positive reviews in the market.
The company noted that historically, excessively negative market sentiment has preceded price recoveries. However, it stated that the current level of fear has not yet reached extraordinary proportions and that negative sentiment may need to persist for some time before a stronger recovery signal is received.
One of the key indicators highlighted in Santiment’s assessment was the MVRV ratio, which measures the average unrealized profit and loss of investors.
According to the company’s data, Bitcoin’s 30-day MVRV (Most-Time High Rebound) has fallen by approximately -11%, while its 365-day MVRV has dropped by -12%.
This indicates that investors who were active during the relevant periods incurred losses on average.
Santiment noted that periods in which both short-term and long-term MVRV values turned significantly negative in historical data could create relatively lower-risk conditions for taking new positions.
Another important indicator was the ratio of profit and loss transactions along the supply chain.
According to recent data, for every profitable transaction on the Bitcoin network, there are approximately three losing transactions. Santiment noted that periods when investors traded at this level of loss have historically coincided with certain local market lows.
However, the company stressed that these indicators do not necessarily mean a guaranteed rise in the short term.
Large Bitcoin Investors Continue to Protect Their Assets
According to Santiment’s analysis, there has been a limited decline recently in the share of large Bitcoin investors in the total supply.
The large group of investors that controlled 68.29% of the Bitcoin supply on November 2nd now holds 68.11% according to the latest data.
The company stated that this change did not signal a large-scale sell-off, but that individual investor buying was more prominent during the current downturns.
According to Santiment, a stronger bottom signal could be triggered by large investors returning to accumulation and individual investors withdrawing from the market.
On the other hand, indicators such as the number of active addresses and network growth on the Bitcoin network have largely remained flat despite the sharp decline in prices. The company viewed the continued stability of network usage positively.
Outflows from Bitcoin ETFs Continue
Another development highlighted by Santiment was the outflow of money observed in Bitcoin ETFs throughout November.
According to the company’s assessment, during the period examined from the beginning of November, there was only one day with limited net cash inflow, while net outflows were recorded on the other days.
Santiment noted that past massive outflows from ETFs have coincided with periods of peak investor fear.
However, the company stressed that there has not yet been an exceptionally large outflow of money that could be considered a strong signal of a bottoming out.
$68,000 is a Critical Level for Bitcoin
Santiment stated that Bitcoin is trying to find support around $68,000 and that a re-surpassing of the $70,000 level could be important for short-term price movements.
The company also noted that approximately half of the social media discussions in the cryptocurrency market focus on Bitcoin. The shift in interest from speculative altcoins to Bitcoin is described as one of the developments seen in past market cycles before a recovery.
According to Santiment, negative MVRV values, an increase in losing trades, and deterioration in market sentiment suggest that Bitcoin may be approaching a lower-risk price zone compared to previous periods.
*This is not investment advice.
