Bitcoin’s value in USD hovers around $30,000 and is trending upward during the previous five-day period according to BitcoinAverage.com.
As the Bitcoin price seemingly begins to stabilize after last week’s sell-off, the Fear & Greed Index is now at a 12, up from 8 yesterday representing ”extreme fear.”
Additionally, TradingView’s technical analysis ratings tool continues to advise investors to sell their Bitcoin or remain neutral over a trailing 30-day period.
Bitcoin needs to flip support before short-term move up
In order to generate a positive short-term momentum signal, Bitcoin needs to continue its upward price trajectory above the $27,000 support zone limit through the remainder of this week
The $27,000 – $30,000 support zone limit is based on the price projections of the BTC/USD pair using key indicators, and the index takes into account a few factors when deriving a score, including Bitcoin volatility, market momentum and volume, social media reactions, coin market capitalization, and Google Trends data.
As the index rises slowly, and the price continues to climb over the previous 5-day period, neither have yet to trend toward a meaningful upward or downward trajectory, and volatility continues.
And while some analysts are saying that the price could fall below last week’s ten-month lows, popular analyst Credible Crypto argues that historical norms indicate that Bitcoin has little reason to reset to $20,000 or lower.
“The argument for 13K-14K $BTC on the premise that past major bear markets have led to 80% declines from the top makes a major assumption- that 65k was the cycle top,” he wrote on Twitter.
Despite dip in Bitcoin price, whales have been accumulating
And he may be correct, because according to a report by CoinShares, Bitcoin saw a surprising level of inflows through May 6, the week of the crash, when it still brought in $45 million, which implies that many investors are buying the dip.
However, the Financial Times recently reported that institutional investors dominated trades in crypto in 2021, and that retail investors accounted for only a third of all trades, using trading on Coinbase for analysis.
Therefore, as the bitcoin (and crypto) market’s recent dive clears $1.25 trillion from an all-time high market capitalization that was topped in November 2021, its becoming increasingly apparent that the bitcoin market is growing correlated to the stock market.
So, even though retail investors are buying in this dip, there has been an influx of institutional interest in Bitcoin, beginning in early 2020, based on public declarations from, “stalwarts of traditional investing, such as Paul Tudor Jones and Renaissance Technologies [that] coincides with a sustained jump in the 60-day correlation between BTC and the S&P 500,” based on a report by Genesis trading released in April 2022.
And while we know that correlation does not equal causation, institutional investors appear to have increased the correlation, because when the stock market goes down, it takes bitcoin with it.
So, would it be naive to ignore the looming question: What role is institutional money playing in the crash? Are they making things worse?
As the index rises, its possible that sentiment is not as bad as it was last week, investors are still afraid, according to hosting site Alternative, which updates the Crypto Fear & Greed Index at 8pm (EST).