- Bitcoin sentiment spikes with ETF inflows, but analysts warn of a bearish head and shoulders pattern.
- Market corrections follow Bitcoin’s bullish sentiment, with the MVRV ratio showing balanced market conditions.
Bitcoin [BTC] has experienced a market correction following a period of increased bullish sentiment.
According to market intelligence platform Santiment, the crowd’s optimism toward Bitcoin has been steadily growing, with sentiment data showing a notable shift.
This optimistic outlook, however, has raised concerns of a potential market top, which often leads to price corrections in the cryptocurrency space.
Bitcoin’s price retraced from $65,664 to $63,243 on Monday, triggered by some panic selling.
Santiment warns that if the current fear of missing out (FOMO) turns into fear, uncertainty, and doubt (FUD), Bitcoin’s market could experience heightened volatility.
Santiment noted that the market has historically moved against crowd expectations, signaling a potential continuation of this correction.
Rising sentiment and ETF inflows
Santiment’s analysis from last Friday indicated growing confidence among Bitcoin traders, following a 22% price surge over the past three weeks.
The sentiment ratio, which tracks the balance between bullish and bearish posts about Bitcoin, revealed a significant rise in optimism, with 1.8 bullish posts for every bearish post.
While this suggests positive sentiment, Santiment points out that excessive confidence often precedes market downturns, as traders may be overly optimistic.
Source: Santiment
At the same time, Bitcoin exchange-traded funds (ETFs) have seen massive inflows. On the 30th of September, Lookonchain reported that $BTC ETFs witnessed 7,111 BTC in net inflows.
This equated to approximately $453.42 million.
A substantial portion of this, around 3,085 BTC ($196.71 million), came from ARK21Shares, elevating its cumulative holdings to nearly 50,684 BTC.
These institutional inflows come as market participants await the U.S. Securities and Exchange Commission’s (SEC) decision on pending applications for spot Bitcoin ETFs.
The anticipation of potential ETF approvals has likely contributed to the growing interest from institutions.
Moderation in the market
The MVRV ratio, which compares Bitcoin’s market value to its realized value, currently stands at 1.85. This suggests that Bitcoin is trading above its realized value, but is not in an overheated or undervalued state.
Historically, peaks in the MVRV ratio, typically above 3.5, have marked Bitcoin price tops, such as during the bull markets of 2013, 2017, and 2021. These periods were followed by sharp corrections and bear market phases.
Source: IntoTheBlock
When the MVRV ratio falls below 1, it indicates that Bitcoin is trading below its realized value, often presenting buying opportunities.
The press time ratio of 1.85, however, suggested the market was in a balanced state, with potential for either continued correction or recovery, depending on future sentiment shifts.
Bearish technical pattern adds to uncertainty
Adding to the uncertainty, a recent report from AMBCrypto highlighted concerns raised by a crypto analyst known as Ash Crypto.
Read Bitcoin’s [BTC] Price Prediction 2024–2025
The analyst pointed out a multi-year bearish head and shoulders pattern on Bitcoin’s chart that has been developing since 2021.
The coin’s price is nearing the neckline support of this pattern, and failure to hold this support could result in a substantial price drop.
