Bitcoin has become more speculative and volatile than ever. Last week, going through a motion of bearish corrections, the flagship cryptocurrency price dived from $65K ATH to $42K. In the last 24 hours, the cryptocurrency has gone further down, and now it is resting upon the $40K mark. Even though, for the time being, Bitcoin has stopped the bear correction, the expectations for further downward descent have taken root.
Many institutional investors seem to hold on to their Bitcoin holdings, and most of them decided to buy the dip. One example is Michael Saylor, who bought about $10 million worth of Bitcoins in the matter of a week. The market started to lose its standing when Tesla announced that it would stop accepting Bitcoin as payment on account of its proof of work consensus model and huge energy consumption. The electric car company also mentioned that Bitcoin might be taking away from limited resources like fossil fuels from the industrial sector.
Bitcoin Price is not Down Alone
Bitcoin briefly hit $31,600 today; the investors have dubbed this event as Black Thursday. Since the king coin has plummeted 30%, the market sentiment for fear has risen to its highest. As per the Fear and Greed crypto index that is used to measure the market viability, the fear radar has plummeted to an all-time high in one year. The rating for greed last month indicated the Bitcoin market has become oversaturated.
It seems that the bear market expectations have taken most investors hostage. Ever since Tesla parted ways with Bitcoin, the cryptocurrency has been trapped into a downward spiral. While Bitcoin has plunged about 27.63% in the matter of a week, the altcoin markets have followed suit. Ethereum went down 42%, Binance Coin depreciated 50%, and Dogecoin tumbled about 26%.
Inflow index is the difference between Bitcoin transactions to and from the crypto exchange platforms. Glassnode reported that net inflow for Bitcoin recorded at 32,274.05. Since the ominous Black Thursday event, the selling pressure has increased in the crypto markets. As a general rule, investors prefer to lock their Bitcoin stash in cold storage wallets and away from the markets. However, if the investors start to close their long positions, the inflow could increase dramatically.
The comparison of parallel indices indicates that outflows have dropped down by 10%; meanwhile, Inflows have plummeted about 50% in the same time frame. Such a sentiment can be translated into the fact that the preference for buying the dip prevails while investors are also refraining from selling their holdings and dissolving their long-term positions. Nevertheless, as $1.6 billion worth of contracts is approaching their expiration date at the end of May, the fear for further price fall is much anticipated.