Cryptocurrency analytics company Santiment has examined critical metrics following the recent sharp market declines and deepening bearish sentiment. Santiment analyst Brian stated that investors are overly fearful, but on-chain data points to strong recovery potential in the medium term.
The decline in the market to its lowest levels in the last two months accelerated with news that MicroStrategy and Michael Saylor sold 32 Bitcoins. Analysts noted that while the amount sold was negligible compared to the company’s total assets, the fact that someone who had said “I will never sell” did so created a significant psychological slump and negative sentiment in the market.
However, Santiment interprets the peak in bearish sentiment and expectations on social media as a traditional sign that “the bottom is near.”
MVRV (Market Value to Realized Value) metrics, which measure the fair value of cryptocurrencies and investor profitability, indicate a significant market capitulation, according to analysts.
Analysts summarized their views on Bitcoin, Ethereum, and XRP as follows:
- Bitcoin (BTC): The 30-day MVRV (Minimum Viable Rate) has fallen to -11%, and the 365-day rate to -26%. Historically, short-term MVRV rates below -10% are considered the “buy/opportunity zone” where the average cryptocurrency follower faces minimal risk.
- Ethereum (ETH): Affected by the intense FUD wave on social media, ETH’s 30-day MVRV has dropped to -11%, and its annual MVRV to -35%, presenting a more “chaotic” picture compared to Bitcoin.
- XRP: The most striking data in the metrics was seen in XRP. XRP’s MVRV ratio fell to -54%, its lowest level in the last 4 years. According to analysts, this situation is similar to optimal buying periods before massive uptrends for XRP in the past (such as September 2022).
Bitcoin spot ETFs have experienced an almost uninterrupted net outflow for the past four weeks, with over $6 billion in funds drained from the market. Santiment argues that ETF data, initially showing institutional interest, has now become a “contrary indicator” measuring retail investor sentiment. Given that large ETF outflows often coincide with market lows, this could be a reversal signal.
On the other hand, wallets known as “whales and sharks,” holding between 10 and 10,000 BTC, have seen a slight decrease of approximately 20,600 BTC in their holdings over the past four days. Experts point out that for a truly new bull cycle to begin, these large whales need to resume aggressive buying while individual investors remain apprehensive, and there may be a delay in this regard in the data.
Another notable aspect of the market is that while traditional stock indices like the S&P 500 are hitting new records, cryptocurrencies are moving in the opposite direction. Since the beginning of May, the S&P 500 has risen by 5%, while Bitcoin has lost 15.5% of its value.
Santiment notes that such a sharp negative correlation hasn’t been seen since the FTX crash, but predicts that with traditional markets becoming overinflated, money will eventually return to fast-moving crypto assets in the form of a “catch-up rally.”
Santiment analysts also shared the following opinions about some other altcoins:
- Hyperliquid (HYPE): Defying the general market downturn, the platform gained nearly 88% in value over the last 3 weeks and doubled its market capitalization. However, investors starting to expect a correction (decreased sensitivity) is being interpreted as a counter-signal suggesting that the uptrend may continue.
- Solana (SOL): Having fallen 21.5% from its peak in the last 3 weeks, Solana, while attracting significant social media attention, doesn’t occupy the same extreme balance of fear and greed as XRP or BTC.
*This is not investment advice.
