As De-risking Continues, Is Bitcoin Price Eyeing the $28,000 level?

Key Insights:

• Bitcoin’s price has retested the lower $30,000 zone after July 2021.
• BTC inflows from private wallets are presenting a rise in selling pressure.
• Institutional investors are being cautious amid falling BTC prices.

As the global crypto market cap slid under the $1.5 trillion mark standing at $1.42 trillion at the time of writing, there was a 10% drop in the value of the total cryptocurrency market over the last day. The market’s top asset, bitcoin (BTC), had fallen by 10% in the previous 24-hours as market-wide-sell offs intensified.

Fear Overtaking Bitcoin Holders

According to the Crypto Fear & Greed Index, the more significant sentiment among crypto investors for the most part of this year has been ‘fear’ and ‘extreme fear.’ Notably, bitcoin inflows from private wallets accounted for 40% of total inflows across exchanges. Higher exchange inflows are indicative of a rise in selling pressure.

Seemingly, a crypto winter had arrived as analysts made predictions of a prolonged period of falling prices and negative market sentiment over the coming days.

Bitcoin had plunged to its lowest level since July 2021 as the crypto’s price fell in tandem with slumping U.S. equity markets. The larger market fall could be due to concerns about the Federal Reserve’s aggressive tightening path.

Notably, on Monday S&P 500 hit its lowest since April 2021. The declines were led by subsequent declines in mega-cap growth shares. Even Nasdaq was down by more than 3%, while Apple shares fell by over 3% and were the biggest weight on the Nasdaq and S&P 500.

At the time of writing, bitcoin had dropped to as low as $31,201.59 noting a 9.04% fall in 24-hours and an 18.62% fall over the last week. As BTC traded just above the crucial $29,300 resistance, a fall below the same seemed inevitable, looking at the rise in selling pressure.

Institutional investors de-risking

Bitcoin’s price dropped by almost 25% in the month of May and was down by nearly 55% from its all-time high price of $69,000 in November last year. Analysts predict a crypto winter for investors in early 2018; when a crypto winter set in, Bitcoin price saw an 85% pullback.

Notably, macro-bearish trends had also started to show up for BTC. Analyst, Lark Davis, pointed out that Bitcoin recently closed its sixth consecutive red candle on a weekly chart. The last time a similar trend occurred was in 2014, ahead of a Bitcoin bear market.

#bitcoin has just completed its 6th red weekly candle.

The last time this happened was 2014!

That's crazy man! pic.twitter.com/kWdBiPA5th

— Lark Davis (@TheCryptoLark) May 9, 2022

Crypto Quant data presented that Coinbase price premium was trading negative, indicating selling by institutional investors.

The Coinbase Price Premium has started trading negative around May 2 on the hourly chart. Institutional investors and large investors often use Coinbase Pro to buy and trade bitcoin, and a negative price premium indicates that selling pressure might be coming from these types of investors.

The larger market trend indicates that the financial markets are currently trading risk-off. Analysts expect investors from the traditional finance sector to reduce exposure to bitcoin and other risky assets in such a situation.

The bearish sentiment was further seen in BTC long liquidations. There were over $724 million long liquidations in the market on May 9. This day resulted in the largest number of long liquidations this year.

For now, looking at BTC’s price action, alongside bearish investor sentiment, a revisit to the lower support zones could be expected in the near future.