Bitcoin Drops 2% But Market Sentiment Remains Steady

Crypto market sentiment has remained stable despite Bitcoin's price dropping nearly 2% over the past day, settling close to the $105,000 mark. The Crypto Fear & Greed Index recorded a "Greed" score of 63 out of 100 on Wednesday, a slight decrease from Tuesday's score of 64, as Bitcoin's price fell 1.79% to $105,560 after nearly reaching $108,000 the previous day.

Analysts have been speculating about when Bitcoin might retest its all-time high of $111,970, reached on May 22. Optimism was high on Monday as its price hovered just below $109,000, but it has since slipped into another short-term downtrend. Some analysts noted that the third quarter, which began on July 1, is typically a weaker period for Bitcoin. Since 2013, Bitcoin has averaged a 5.47% gain during the third quarter each year. If this trend continues, it would place Bitcoin’s price around $111,000 by the end of September, just shy of its all-time high.

Bitcoin's performance during the second quarter closely matched its historical average, posting a 31% gain to $108,383, approximately 4% above the 27% average Q2 return since 2014. Bitcoin ended the month of June with its highest monthly candle. Other indicators suggest that the market is still heavily favoring Bitcoin. Bitcoin dominance is sitting around 65.5%, up nearly 13% so far this year. Meanwhile, the Altcoin Season Index is sitting at a “Bitcoin Season” score of 20 out of 100, indicating that the market is still heavily favoring Bitcoin.

However, CryptoQuant's head of research, Julio Moreno, noted that CryptoQuant’s Bitcoin Bull Score Metric has declined to a level of uncertainty. “Bitcoin Bull Score is in NEUTRAL territory now– 50. Needs to be 60 or above for prices to sustain a rally,” Moreno said. Despite this, the market outlook for Bitcoin remains positive, with July historically being a favorable month for the cryptocurrency. The average return for Bitcoin in July since 2013 is 7.56%, and the cryptocurrency has gained in eight out of 12 periods. The current macroeconomic conditions, including lower geopolitical concerns and possible monetary policy stimulus, could provide further support for Bitcoin.

On-chain data reveals significant profit-taking by long-term holders, with substantial earnings realized on coins held for 3 to 5 years and 7 to 10 years. Despite this, Bitcoin's price has remained stable, indicating that the market is absorbing the selling pressure through steady demand from new buyers. This stability is further supported by institutional adoption, with cumulative net inflows to global Bitcoin ETPs reaching a record high this year. Additionally, corporate treasuries have been increasing their Bitcoin holdings, with MicroStrategy recently adding 4,980 Bitcoin to its reserves.

Technical analysis suggests that Bitcoin is likely to remain range-bound between $100,000 and $110,000 in the near term. The $109,000-$110,000 resistance level is crucial, and a break above this zone could trigger a short squeeze, pushing prices to new all-time highs. However, if Bitcoin fails to hold its current support levels, it could test the $100,000 psychological support level, which is likely to attract significant buying activity due to institutional demand. Overall, the market sentiment for Bitcoin remains steady despite the recent price drop, with institutional adoption and historical trends pointing to a potential rally in the coming months.