Market Sentiment Drops as Bitcoin Slumps
The Crypto Sentiment Index, a key gauge of market confidence, has fallen to 65, its lowest level since October. This dip reflects waning optimism as Bitcoin’s price slides in the final days of 2024. While still within “greed” territory, the index has significantly declined from November’s highs.
Bitcoin Slides 13.7% in December
Currently trading at approximately $93,000, Bitcoin has seen a 13.7% drop over the past 12 days. This downward trend has prompted concerns among traders, with many investors seeking safety in stablecoins.
Peak Sentiment in November
November’s sentiment peaked at 94, following President-elect Donald Trump’s victory and an increase in pro-crypto voices in Congress. Optimism during this period kept the Crypto Sentiment Index above 70 for weeks.
Volatility on the Horizon
The index is influenced by factors such as price momentum, online discussions, dominance, and volatility. Markus Thielen, head of research at 10x Research, expects heightened volatility in the coming weeks. This outlook contrasts with predictions of a strong upward move before Trump’s inauguration.
Traders Identify a Familiar Pattern
Veteran trader Peter Brandt has identified a possible “Rise-Dip-Recover-Fall-Rebound” pattern in Bitcoin’s behavior. This theory suggests that Bitcoin could see an eventual recovery after further short-term declines. CryptoQuant CEO Ki Young Ju supports this possibility, indicating that investors should prepare for a turbulent period.
Bitcoin Still Leads as Top Asset
Despite recent setbacks, Bitcoin remains the decade’s top-performing asset, outperforming traditional investments by over 26,000%. According to CoinGecko, Bitcoin returned 129% in 2024, significantly outpacing gold’s 32.2% and the S&P 500’s 28.3%.
As the year ends, the crypto market faces a test of resilience, with traders keeping a close eye on the next moves in Bitcoin’s journey.