In the midst of the Bitcoin’s fluctuation around the $103,700 mark, globally rising tensions have cast a shadow of uncertainty on its price trend. Retail sentiment, too, is showing signs of weakening, thereby adding to the downward pressure on Bitcoin. However, it’s plausible that the current dip could merely be a temporary cool-off stage, rather than a terminal halt to Bitcoin’s bull run.
An analytics firm specializing in cryptocurrency, Santiment, recently reported a sharp turn towards negativity in retail sentiment, reaching a low unseen since the beginning of April. This mirrors the situation in April, just prior to a Bitcoin bounce-back, indicating that the surge in bearish commentary could be a harbinger of a rebound. Concurrently, the Federal Reserve’s steady rates have left Bitcoin oscillating between $100K and $110K. Interestingly, on-chain data suggests that while traders are retreating, whales are in the accumulation phase.
Currently, the crypto market seems to be going through a slow correction phase. While Bitcoin has been trapped between $100K and $107K, altcoins have been on a downward trend since December. Ethereum too is wrestling to cross the $3,000 mark, and the overall decline in trading volume indicates that retail investors are temporarily opting out.
Despite all this, there have been no significant crashes or adverse events. This appears to be a standard cooling-off period within a broader uptrend, much akin to the events of 2017 and 2021. These phases often occur post major rallies and could continue for a few months.
Looking forward, a silver lining may be in sight. The Federal Reserve might cut rates in September – a scenario that CME FedWatch believes has a 71.8% probability. This could stimulate the crypto markets, and even the mere speculation of rate cuts could invigorate sentiment and breathe life into risk assets.
Raoul Pal, CEO of Real Vision, draws parallels between the current crypto market and that of 2017, when Bitcoin gradually grew before skyrocketing in December. He suggests that macro conditions hint at a longer-than-expected cycle, possibly extending into the second quarter of 2026.
Recently, a lot of long traders were eliminated on Binance as open interest declined. This “cleanup” took place immediately after the Federal Reserve put a pause on rate hikes. With fewer traders now in precarious positions, and historical trends suggesting that Bitcoin often rises after such events, this could be a setup for a Bitcoin bounce, according to CryptoQuant analysts.
However, James Wynn, a crypto trader, has expanded his $70M Bitcoin short position, warning of a significant market crash. He points to the escalating tensions between Iran and Israel, dwindling retail interest, and liquidity problems. Wynn believes that if the U.S. enters the conflict, it could provoke a global crisis. Nevertheless, he also holds the view that crypto will rebound post the drop.
