Recent on-chain metrics indicate that crypto traders are becoming increasingly bearish as Bitcoin and Ethereum struggle to hold onto recent gains.
Bitcoin has dropped nearly 7% in the past week, currently trading at $113,479, while Ethereum has seen a more significant decline of 10%, hovering around $4,269.
This bearish trend extends beyond the top two digital assets, with other popular cryptocurrencies like Solana, XRP, Dogecoin, and Cardano also experiencing double-digit losses over the last seven days.
This shift in sentiment contrasts sharply with the bullish optimism that was prevalent just a few weeks ago. The Crypto Fear & Greed Index has plummeted to 52, its lowest level since June, according to Coinperps data.
Additionally, Santiment’s data from Aug. 20 confirms the subdued market sentiment, noting that social media discussions surrounding Bitcoin have hit their lowest levels since June 22.
According to Santiment, retail traders have drastically changed their stance after Bitcoin failed to rally and dropped below $113,000.
Market sentiment has evidently influenced trading activity, with over 50% of Bitcoin positions currently being short, indicating a prevailing expectation of further price declines. On the other hand, 48% of traders have maintained long positions in the past day.
Furthermore, prediction platforms like Polymarket suggest a 60% probability of Bitcoin dropping to $111,000 or lower.
Kronos Research highlighted concerns over a potential rate cut by the Federal Reserve in September as a key factor contributing to the market’s unease.
According to Kronos:
“Powell’s upcoming address at Jackson Hole could serve as a turning point for the crypto market: a dovish tone might lead to a rebound, while hawkish signals could trigger further corrections.”
Notably, the rate markets are signaling a high likelihood of easing, with the CME FedWatch data showing an 81% probability of a rate cut.
