Santiment Expects Bitcoin To Rally Following Weekend Crash

Santiment says increased bets against the market could lead to another rally.

In a tweet on Sunday, on-chain analytics firm Santiment Feed reveals that it expects the crypto markets to rally again as short trades pile up on exchanges following the crash over the weekend that has brought fear in the market to levels last seen in June.

“After Bitcoin fell below $20.9k and Ethereum below $1,540 yesterday, markets have rebounded a bit. Exchanges are seeing high levels of short trades coming in, as people fear drops to June levels again. As long as they bet against markets, there is a higher chance of a rise,” Santiment wrote.

? After #Bitcoin fell below $20.9k and #Ethereum below $1,540 yesterday, markets have rebounded a bit. Exchanges are seeing high levels of #short trades coming in, as people fear drops to June levels again. As long as they bet against markets, there is a higher chance of a rise. pic.twitter.com/Ang11S6f7R

— Santiment (@santimentfeed) August 21, 2022

It is worth noting that June was arguably the worst month in Bitcoin’s history. Bitcoin plummeted by a whopping 38%. The lackluster price action resulted from worsening macroeconomic conditions combined with the collapse of several crypto lending firms following the LUNA debacle in May. However, following the slump in June, the markets had an impressive run in July that saw Bitcoin rise by over 17%.

Notably, the release of the Federal Open Market Committee (FOMC) minutes from its meeting in July led to panic in the markets over the weekend, as the minutes revealed the Fed’s desire to continue raising rates. Consequently, Bitcoin dropped below $21k, while Ethereum dropped below $1600, both assets doing so for the first time in weeks.

However, following the market dump during the weekend, the crypto markets have shown some signs of a resurgence on Monday. Most of the top 10 coins by market capitalization made modest gains in the early Asian trading session. Bitcoin rose by 1.6% to trade above the $21,500 price point, while Ethereum rose by 2.4% to trade over the $1600 price point again. Notably, Binance’s BNB coin led the gains with a 6.5% price surge to $302.39.

Over the last nine months, Bitcoin and the broader crypto market have become more sensitive to dollar strength as the Fed raises rates to combat rising inflation. Consequently, the emerging market has continued to move in tandem with perceived risk assets like tech stocks.

Veteran trader Peter Brandt speaking on the latest price slump noted that Bitcoin had met the price target of the chart pattern. However, he warned that there is no guarantee that Bitcoin will not plunge further.

For all practical purposes the target of the rising wedge in Bitcoin $BTC has already been met. That is not a reason per se to be bullish and it does not mean BTC cannot go lower yet pic.twitter.com/fB3sGa9e6o

— Peter Brandt (@PeterLBrandt) August 20, 2022

Meanwhile, pundit Lark Davis warned that several investors would be taken in by relief rallies perceiving it to be the start of a bull run. Furthermore, he warned that crypto enthusiasts should expect more sideways movement in the crypto market during this bear cycle.

The psychology of a relief rally ?

Price gets just bullish enough to fool you that this rally is the real deal. ?

There could be an end to the pain. ?

Then BLAMO, the market rugs you shattering your hopes. ??

Expect this a few more times during the bear!#bitcoin #crypto

— Lark Davis (@TheCryptoLark) August 22, 2022

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