Sentiment indicators reached “rock bottom” on Monday amid a prominent fund manager calling for a retest of 2019’s price levels.
Bitcoin (BTC) delivered its eighth straight week of losses for investors for the first time in its history amid weak macroeconomic sentiment, inflation concerns, systemic risk from within the crypto industry, and the lack of immediate catalysts that could drive upside growth.
Prices were at $30,272 late Sunday, after falling as low as $28,700 earlier in the week. Bitcoin last saw a positive week of gains in mid-March as prices jumped from $41,000 to $46,000. It has slid every week since then, falling nearly 60% from November highs of just over $69,000.
Bitcoin has been weighed down by rate hikes in the U.S. and global inflation concerns, and has traded similar to a risky technology stock in the past few months.
Data from the on-chain analytics tool Sentiment suggests bitcoin prices may see a bottom at current levels and appreciate in the coming weeks.
The firm’s Weighed Sentiment tool – which calculates positive and negative comments for an asset on social media – suggested public sentiment for bitcoin reached levels last seen on “Black Thursday,” a colloquial term among crypto circles referring to bitcoin prices falling under $4,000 in 2020.
Prices are historically likelier to rise when sentiment reaches low levels, the firm said. Data shows bitcoin prices have risen three out of the past four times the indicator has reached similar levels.
Recession fears have contributed to a slump in bitcoin in the past few months.
In April, Goldman Sachs (GS) analysts said in a note that the U.S. Federal Reserve’s aggressive measures to control inflation could result in a recession. The bank put the odds of an economic contraction – a phase of the business cycle in which the economy as a whole is in decline – at about 35% over the next two years, as reported.
Some analysts pointed out that institutional investors have taken out more money from the ecosystem than poured in funds – suggesting a generally bearish sentiment that may have also contributed to falling prices.
“CoinShares data for last week showed a record weekly outflow of institutional investors from crypto funds since the start of the year,” FxPro market analyst Alex Kuptsikevich told CoinDesk in an email. “Funds are operating cautiously, and their actions may be holding back growth while buying on the dips comes from retail and crypto-kits.”
The market is distilled from sporadic participants who want to “ride the wave” but are not crypto enthusiasts by nature,” Kuptsikevich added.