Market sentiment for September following the sell-off is explored through the lens of on-chain data and historical sentiment trends.
In August 2023, the crypto market experienced significant fluctuations in its volatility. Over the last 48 hours, the market witnessed a massive $1 billion sell-off, triggered by a series of bearish events.
The question arose: could this move signal the end of the protracted period of consolidation that had persisted for the past two months? Is it the new beginning of a bull market in the coming months and what factors contributed to the recent stabilization of the market?
Additionally, does the influx of buyers looking to capitalize on the market downturn indicate a possible uptrend in the coming months? Or is there a more bearish rally waiting for the market? This research dives into market sentiment for September following the sell-off.
Analyzing the $1 Billion Settlement
On Thursday, August 17, the crypto market experienced a severe downturn during the closing hours of the US trading session following news of Bitcoin being sold by SpaceX, Evergrande’s bankruptcy filing, and interest rate fears.
Both Bitcoin and Ethereum reached their lowest values at approximately $25,100 and $1,550, respectively. As a result, the global market capitalization fell below the $1 trillion mark, hitting a low of approximately $996.9 billion.
However, a slight rally was seen shortly after the possibility of the Ethereum ETF being greenlit by the SEC. Currently, total market liquidation has exceeded $67 million while short positions are largely being liquidated, indicating that sellers are dumping their holdings.
Since August 17, the total liquidation exceeded $1.1 billion and affected about 200,000 merchants.
Stabilization in Bitcoin and Crypto Market: On Chain Sentiment
Netflow: After a market sell-off, Bitcoin Netflow dropped from 3,992 to -3,847. The Exchange Netflow is calculated as the difference between the inflow and outflow of BTC on the exchanges. A negative net flow currently implies a sell-off period for the Bitcoin price.
NUPL Ratio: Bitcoin’s NUPL (Net Unrealized Gains and Losses) ratio decreased from 0.29 to 0.22 after the BTC price will fall below the $28,700 region. However, when there is a trend of declining values, it means that more people who own coins are experiencing losses. This situation also suggests that there is less motivation to sell these coins at a loss, reducing the overall pressure to sell.
Some traders actually hold on to their Bitcoin despite its falling price. Among a small group of traders, there seems to be a feeling of holding on to their assets. They may be using a strategy called Dollar Cost Averaging (DCA) to take advantage of a possible future increase in value.
Long-Term SOPR Headline: Interestingly, the long-term SOPR headline was stable above the 1 level despite the recent market decline. This suggests that long-term (>155 days) holders are still selling at a profit.
Long-term holders are often called “strong hands” because they have weathered various market fluctuations and are more likely to hold through price declines. Their willingness to sell at a profit rather than panic sell during a crash demonstrates their faith in Bitcoin’s long-term potential. This can help stabilize the market during difficult times.
Traders should do their own research before making any financial decisions, as the market is currently extremely volatile.
By Audy Castaneda
