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One could argue that the cryptocurrency market remains confident despite the bitcoin price seeing a significant drop to $94,000. Although the price action says otherwise, this confidence is highlighted through several predictions from crypto analysts on social media and on TradingView, which covers several cryptocurrencies.
Amid falling prices and market optimism, the crypto market fear and greed index continues to point to greed, which is leaning towards the idea of a momentary drop before a broader recovery.
bitcoin price drop halts bullish momentum
The cryptocurrency industry has largely shown bullish momentum throughout 2024, with many cryptocurrencies hitting new multi-year highs. This momentum was led by bitcoin, which surpassed its 2021 all-time high of $69,000 in mid-2024 to eventually break above the psychological level of $100,000 for the first time on December 5.
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However, bitcoin's price action since crossing the six-digit price threshold has been mostly full of corrections. Although it reached a high of $108,135 on December 17, the last 12 days have been characterized by price declines. Notably, bitcoin has corrected so low like $92,600 in the last seven days, essentially leading to a cascade of falls among other cryptocurrencies and stop the bullish momentum.
bitcoin's decline has surprised many cryptocurrency traders, considering its strong rally in recent months. Analysts attribute this correction to profit-taking by a few long-term holders and a temporary slowdown in market activity.
crypto Market Sentiment Remains Greedy
Despite recent price drops, <a target="_blank" href="https://bitcoinist.com/bitcoin-dominated-by-hodling-sentiment-metrics-reveal-holders-move-btc-less-frequently/” rel=”nofollow”> HODLing Trends Suggest that the cryptocurrency market remains on track to maintain its rally through 2025. This sentiment is reflected in the Fear and Greed Index, which continues to oscillate in the greed zone, indicating confidence among investors. The index is derived from a combination of key metrics, including market volatility, trading volume, social media sentiment, bitcoin dominance, Google search trends, and surveys. Each component is carefully weighted to measure the psychological state of the market.
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At the time of writing this article, the crypto Fear and Greed index, according to at alternative.me, It's at a reading of 72, which is on the threshold of greed. This conveys investor confidence across the various market indicators and suggests that traders perceive the decline as a buying opportunity rather than a cause for panic.
This feeling of greed is transmitted through some purchasing trends in notable cryptocurrencies. For example, on-chain data from crypto analytics firm Santiment shows that Dogecoin whales have purchased over 90 million DOGE tokens in the last 48 hours. With this in mind, analysts are optimistic about a broader market recovery in the coming weeks. Technical indicators are pointing to a bitcoin-led bounce if it can continue to hold above support levels around $92,000.
At the time of writing, bitcoin is trading at $94,400 and is down 12.8% since reaching $108,135 on December 17. <a target="_blank" href="https://x.com/ali_charts/status/1872720353409016049″ rel=”nofollow”>According crypto analyst Ali Martinez, such corrections (between 20% and 30%) are the best thing that can always happen to bitcoin in every bull cycle.
Featured image created with Dall.E, chart from Tradingview.com
