Is Bitcoin Price Optimism Fading After Crypto Market’s Bumpy April?

Bitcoin (BTC) peaked around $46,000 on April 4 before falling freely back to $38,000, prompting crypto traders so used to the market’s unreal returns over the past two years following the March 2020 crash were, caused a lot of frustration.

February and March showed signs of recovery, especially after the sharp falls in December and January. But the question is, why has the bullish momentum suddenly stalled?

Continuation of S&P 500 correlation

The correlation between crypto and stocks, particularly bitcoin and the S&P 500, remains and is expected to last until mid-May when Jerome Powell and the US Federal Reserve announce a likely 0.5% rate hike to combat inflation.

However, this does not necessarily mean that Bitcoin will continue to decline. Suppose cryptocurrencies continue to mimic stock price movements and not vice versa. In that case, many are speculating that although the S&P 500 has fallen recently, rate hike fears would likely have been boiled down ahead of the Fed’s scheduled meeting.

Bitcoin Whales Clean, Tether Whales Surge

There are two go-to whale tiers that crypto data platform Santiment consistently looks at to analyze the future price action of the entire market: offering addresses with 100-10,000 BTC and offering addresses with 100,000-10,000,000 Tether (USDT). .

Over the past two months, BTC whales from this key group have lost 0.6% of their holdings. Meanwhile, the key group USDT has actually added 1.8% of the top stablecoin supply.

Although major whale addresses have dumped their BTC supply, evidence shows that prices generally rise when there are more addresses holding 10 to 100,000 BTC. Since the outbreak of the Russo-Ukrainian War in late February, addresses with a total value of around $3.8 million have been created or returned to the BTC network.

Traders misled about dip buy opportunities

Santiment has found a reliable trend that the mainstream crowd is wrong most of the time when believing in an overly uniform price event. Even with the “buy the dip” narrative in full swing, the chart below shows that prices did not rebound in the way traders had hoped. Ironically, prices often begin to recover when the crowd gives up any inclination to see the bottom.

Ether whales begin to show interest

Santiment’s Ether (ETH) whale transaction count shows that the level had started to surge to the same rate of over 1,400 per day seen last week as the decline was quickly pared down. High-value transactions above $100,000 would likely indicate that key stakeholders are starting to float their coins at bullish levels.

Dealers go into May shortly

Exchange rates are another price direction indicator. When there are excessive longs (betting in favor of higher prices), as seen just after the all-time high in November, prices tend to correct. Currently, however, the opposite trend seems to be emerging.

Significant short funding rates can be seen across multiple exchanges, suggesting that FUD is evident around the crypto markets. In general, when BTC and altcoins are shorted together at this rate, there is a significantly higher chance of prices rising to force liquidations against those betting against rising crypto prices.