Crypto Market: Bitcoin Rises While Indicator Flag Bearish Sentiment

BTC is in recovery mode as some indicators suggest the sell-off is approaching oversold levels. The relative strength index (RSI) on the daily chart is rising from oversold territory. But the bitcoin Fear & Greed Index is again approaching extreme levels last seen in May, flagging a bearish signal.

At the time of writing, bitcoin is trading at about $44,680. It is up 3.33% on a daily chart, compared with a 2.67% rise in ETH and a 2.97% rise in Cardano’s ADA token over the same period of time.

Altcoins were seemingly outperforming bitcoin on the way up after they took a relatively bigger hit during the sell-off earlier this week.

Many have been buying the dip, especially long-term BTC holders, according to blockchain data. However, some analysts remain skeptical of the recent rebound and expect BTC resistance at $47,000 to stall the upside.

Other traders remain active, looking for opportunities for investments that will outperform BTC by using options and futures strategies.

According to crypto hedge fund BKCoin Capital, “over time, a lot of folks that deployed in crypto went for vanilla (passive) strategies, but saw that they could get more alpha and mitigate risk with active strategies.”

Fear & Greed Index

Bitcoin’s Fear & Greed Index is sending bearish signals. Some analysts view that as a contrarian signal and expect bullish sentiment to return into the fourth quarter.

According to Arcane Research, “Bitcoin lost its momentum before the greed level was hit, when another market crash happened, and the Fear and Greed Index fell right back into the fearful levels.”

Historically, extreme fear levels in the Fear & Greed Index preceded turning points in BTC’s price, like when it hit an all-time high of about $63,000 in April and sunk to a recent low at around $30,000 support in July.

Spot BTC volume remains muted as BTC consolidates below the $50,000 price level, suggesting bearish sentiment could take some time to wane.

Bitcoin holders accumulate

Small bitcoin holders, or those who own fewer than 10 BTC, have accelerated their accumulation of BTC after large sell-offs, according to blockchain data compiled by Glassnode.

The chart below shows the distribution of small bitcoin holders at about 13% of total supply. These holders have increased their stake in BTC since the crypto sell-off in May, suggesting that investors remain active above $30,000, where the price has stabilized over the past few months.

Glassnode data also shows long-term holders continue to accumulate bitcoin. Therefore, “this leg down was likely caused by speculators taking a risk-off stance in anticipation of macro and regulatory headline risk factors,” crypto research firm Delphi Digital wrote in a blog post.

Altcoins

Altcoins rebound after sell-off earlier this week: Prominent tokens such as Cardano’s ADA, Solana’s SOL and Terra’s LUNA were up between 6% and 25%. AVAX, the native token of the Avalanche open-source platform, added 24% to hit a record of $79.58, according to data from Messari.

Grape Network raises $1.2 million despite causing Solana outage: The project’s token sale caused a nearly daylong Solana outage last week, but Grape Network still pulled off a $1.2 million funding round that was led by Multicoin Capital. The venture funding comes on the heels of last week’s $600,000 public sale that was so overheated with bot-buyers that it knocked host blockchain Solana offline. “We didn’t break it out of intention,” Grape Network founder and core contributor Dean Pappas told CoinDesk in an interview. “But we were part of the reason it got broken.”

Miami Mayor Suarez says MiamiCoin going mainstream ‘faster than bitcoin’: In an appearance on CoinDesk TV’s “First Mover,” Suarez, who is working to attract crypto businesses to Miami, claimed MIA has “been mainstreaming significantly faster than bitcoin,” even though holders can’t yet buy anything with the token. People can “mine” MIA by sending STX, the native token of Stacks, to a smart contract, which forwards 30% of those contributions to a wallet reserved for the city. Last month, the city voted to accept those funds, which are now worth $7 million. Suarez said Thursday the project is generating over $2,000 every 10 minutes for the municipality.