Bitcoin Sentiment Data Shows Bleak Q4 Price Expectations
technical analysis
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technical analysis
The main points
The sharp depreciation on Sept. 24 caused the price of Bitcoin to fall below several key levels, dominated by the 200-day moving average.
Market sentiment data shows that investors are more pessimistic about Bitcoin’s price expectations in the fourth quarter compared to the same period in the third quarter.
At present, investors still remember the sharp depreciation of Bitcoin at the end of the third quarter, and there are more uncertainties about Bitcoin price expectations. As Bitcoin approaches its next halving cycle, many expect Bitcoin to appreciate in value over the next two quarters, but price action has been weak and sentiment data has been dismal.
The "Crypto Greed & Fear Index" reflects greater uncertainty at the start of the quarter. The index collects a large amount of data to gauge investors' views on Bitcoin price expectations. During the first 14 days of the third quarter, the index traded in a range of 33 to 84, with an average of 67.92; for the first 14 days of the quarter, it traded in a range of 27 to 41, with an average of 35.92.
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In the third quarter, the price of Bitcoin experienced a prolonged period of consolidation. The prevailing narrative for this period, judging by social media and analyst views, is: expect prices to break out of the current consolidation pattern and rise sharply.
But this upward trend has not materialized. The price of Bitcoin fell 11.9% on Sept. 24, ending a period of consolidation. Before the sharp drop, the 20-week moving average acted as support.
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Bitcoin price weekly chart showing Fibonacci retracement levels from December 2017 high to December 2018 low. Yellow shows the 20SMA and red shows the 100SMA. Source: Capfol.io
A break below the 38.2% Fibonacci retracement level could also indicate that the long-term downtrend that started in December 2017 is not over yet and we could see prices return below December 2018 levels. However, we believe the likelihood of this happening is low, and the reason for this is based on the mining cost production theory detailed in the next section.
A sharply lower weekly candle low can also be monitored as an important support area. $7,736 was little changed from the ensuing two-week low. Moreover, this level is also in line with the 100-week moving average that many analysts are currently monitoring. A weekly candle close below this level could trigger significant selling pressure. The price drop also took Bitcoin’s price below several important levels on the daily chart.
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Bitcoin daily chart, where the green is the 50-day moving average and the gray is the 200-day moving average. Source: Capfol.io
The 50-day moving average is also moving down toward the 200-day moving average, approaching a highly monitored pattern known as a "death cross." The pattern is so widely monitored that it has little predictive power, but it could cause some short-term volatility if it does form.
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mainstream market theory
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about to halve
mining cost
One theory put forward by cryptocurrency analyst Filb Filb is that Bitcoin may find a new bottom near the cost of mining. Although the production costs of different miners vary, the dominant miners are all based in China, so it can be considered that the average mining cost is much lower than the current price. According to research by CoinShares, its price ranges from $3,500 to $6,500. If this theory holds, we could see further downside in the coming weeks and months.
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For now, we fear more downside price action in the medium term, but we could also see price gains in the near term and another test of the 200-day moving average. We will adjust our view accordingly as the market develops.
OrderBit is committed to quantitative trading research and strategy development based on big data research and judgment, and also provides digital asset investment consulting advice for high-net-worth clients and institutional clients. Clients currently serving include digital asset exchanges, mine owners, wealth management institutions and family offices.
