Bitcoin Sentiment Drops to Yearly Low: An Opportunity to Accumulate, According to Bitwise

Key Takeaways:

Analysts from Bitwise believe that selling pressure has reached its peak, indicating that lower prices could be ripe for purchases.
Smaller Bitcoin holders are accumulating despite a rise in exchange deposits from miners.

Market Sentiment Update

Recent market activity has shown a decline in Bitcoin (BTC) interest, as search volume for the asset has dropped to its lowest point for several months. The latest sentiment metrics resemble those typically seen in downturns, characterized by a cautious overall market attitude.

The Crypto Fear and Greed Index recently registered at a “Fear” level of 24, its lowest figure in a year and down significantly from a previous “Greed” score of 71. This downturn reflects comparable sentiment levels observed earlier this year when Bitcoin fell below $74,000, echoing previous bearish cycles witnessed in 2018 and 2022.

Accumulation Opportunities, Not Panic

Bitwise’s research team contends that despite the initial panic, this situation may actually favor accumulation. The recent correction has been attributed to external factors, notably escalating trade tensions between the US and China, which have amplified global market uncertainties.

The firm’s weekly report highlighted that the recent price correction was exacerbated by an unprecedented wave of futures liquidations, resulting in a dramatic decrease of nearly $11 billion in Bitcoin’s perpetual futures open interest, marking the highest drop on record. Dragosch explained that this liquidation event has significantly alleviated selling pressure, potentially creating a unique opportunity for contrarian buying, reminiscent of the Yen carry trade unwind in August 2024.

Accumulation Trends Among Smaller Bitcoin Holders

Onchain analytics indicate that smaller Bitcoin holders (those with between 1 and 1,000 BTC) have significantly increased their accumulation lately, countering the reduced purchases from larger holders. This trend indicates a resurgence of confidence among retail and mid-tier investors, even amidst market instability.

However, CryptoQuant’s findings illustrate a more nuanced outlook, noting that miners have deposited around 51,000 BTC (worth over $5.7 billion) into exchanges recently, the highest total since July. This behavior often signals impending sell-side pressure as miners convert their holdings into liquid assets. Notably, long-term holders appear to be exiting their positions too, with 265,715 BTC sold in the last 30 days, the largest monthly outflow recorded since January 2025.

Amidst this volatility, Bitcoin’s steady price around the $110,000 mark suggests that institutional or ETF demand might be helping to absorb the surplus supply. The contrasting market dynamics imply a shift from capitulation towards reaccumulation, a phenomenon Bitwise analysts anticipate will bolster bullish market conditions in Q4.