Bitcoin failed to regain strength on February 2 as weak sentiment lingered after last month’s sharp sell-off. The asset fell nearly 16% since January 28, briefly touching $74,600 before stabilizing around the $78,000–$78,500 range, driven largely by retail-led panic selling.
According to Santiment data from February 2, the negative sentiment of Bitcoin reached its peak since the crash on November 21. Although such instances have been seen in the past when the market bottomed out, the market is still volatile despite signs of stabilization.
Source: Santiment
The recent recovery to $78,300 was a result of retail traders closing positions and locking in losses due to rising uncertainty. Markets have a tendency to move in the opposite direction of the crowd’s narrative, especially when fear becomes one-sided.
According to Santiment’s social analysis, the current sentiment is comparable to that of the major downturns, which have been followed by relief rallies.
Also Read: Bitcoin (BTC) Crashes 13% as Saylor Buys the Dip
On-Chain Signals Point to an Incomplete Market Bottom
Joao Wedson, Founder and CEO of Alphractal, pointed out that the market bottoms in Bitcoin occur only after certain conditions are met.
Source: X
The short-term holders are already holding coins at a loss, which is common in the latter stages of the market downturn. The long-term holders, on the other hand, have not yet reached such levels of stress.
Wedson explained that the bear markets end when the realized price of short-term holders falls below that of long-term holders and that a new bull market begins only after the short-term prices rise above the long-term prices. Currently, it appears that these conditions have not been met yet.
Bitcoin Technical Structure Remains Firmly Bearish
As per the TradingView data from February 2, Bitcoin’s daily chart clearly indicates a bearish continuation pattern. The current price of Bitcoin is trading around $78,500 after breaching below the 20, 50, 100, and 200 Exponential Moving Averages.
The initial compression in prices below these levels indicated weakness, and the inability to move above the 20 EMA at $86,300 and the 50 EMA at $89,300 indicated dominance by the sellers. The 200 EMA, which is near $97,500, indicates a change in the trend.
Source: Tradingview
Momentum indicators support this view. The RSI is close to 28, very oversold but still trending lower without bullish divergence. The MACD histogram keeps accelerating its fall on the downside.
From a structural point of view, Bitcoin has moved from a range distribution phase to a breakdown phase, and the area between $82,000 and $86,000, which was support, is now resistance.
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