As Bitcoin and the crypto market broadly retrace, some experts aren’t worried as a correction was expected after a 60% run
Bitcoin’s 13% correction did not go unnoticed by traders, and most of them have started to open short positions that allow them to make a profit from an asset that loses its value.
According to the indicator provided by the CEO of CryptoQuant, the derivatives market faced an increase in the volume of sell (short) orders after Bitcoin faced a retracement in the market. The main reason for this is more likely tied to changed sentiment on the market.
Correction was inevitable
Senior market analyst at Oanda Craig Erlam said the Bitcoin correction was an expected event that should have happened sooner or later, especially after the cryptocurrency has risen by around 66% in the past few months and even more since the beginning of the year.
Most analysts agree that Bitcoin has no other choice but to enter the distribution phase of a cycle and slow down just a bit. A breakout to $ 50,000 is possible, but not critical, given the extent of the rally the market has experienced in recent months.
Market sentiment
Following the increase in volatility on the market, sentiment indicators like the fear and greed index have come closer to the “fear” and “extreme fear” values, which indicate that the market’s reaction is far greater than the actual price movement.
Previously, a minor correction in the market that started in May resulted in a full 50% retracement to $ 28,000 due to the over-leveraged market and a strong change in sentiment, fueled by the industry crackdown that started in China .
At press time, Bitcoin is trading at $57,500 with a slight recovery from the $55,000 area. Even though the cryptocurrency managed to recover 2%, the market remains bearish with more than 12% loss this week.
