Contrarian Indicators in Crypto Market Bottoms

According to crypto sentiment platform Santiment, crypto market lows are unlikely to materialize when a large consensus of analysts and traders predict them. "Be cautious when you see a widespread consensus forming about a specific price bottom," Santiment advises, adding that "true bottoms often form when the majority expects prices to fall further."

This trend recently emerged on social media after Bitcoin (BTC) briefly dipped below $95,000 on Friday amid a broader technology stock decline. Santiment interprets this as a sign that many traders believe the worst is over, historically a precursor to further downside.

The Psychology of Market Bottoms

Crypto market participants frequently declare a market bottom when key psychological price levels are breached, such as Bitcoin falling below $100,000. Despite these calls, prominent figures like BitMEX co-founder Arthur Hayes and BitMine chair Tom Lee have reaffirmed their forecasts of Bitcoin potentially rallying to $200,000 or higher by year-end.

Santiment also highlights that the ratio of positive to negative Bitcoin commentary is at its lowest point in over a month. As Bitcoin's price fell, its social dominance soared to over 40%, indicating it's the central topic of fearful conversations.

Spot Bitcoin ETF Outflows: A Bullish Sign?

Santiment posits that recent significant outflows from spot Bitcoin ETFs could be a positive indicator for Bitcoin's spot price. Historically, substantial ETF inflows often mark local price tops, while significant outflows coincide with market bottoms, signaling retail panic.

Over the past three trading days, US-based spot Bitcoin ETFs have experienced $1.17 billion in outflows, according to Farside. On Thursday, these ETFs saw $866 million in net outflows, marking their second-worst day on record, trailing only the $1.14 billion daily outflows on February 25.


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

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