Understanding the Current Sentiment in the Crypto Market

As Bitcoin (BTC) breaks new highs, the pressing question for many is: "How high can it go?" While this is a common query among investors and AI agents eager for insights, we suggest reframing the question.

Instead of fixating on potential price peaks, consider this: What will the market landscape resemble once BTC reaches its "final destination"? The specific price point—be it $90k, $100k, or $150k—is secondary to the market conditions at that time. Over the past seven years at Santiment, we've learned that assessing the present is crucial for future insights.

Analyzing the Market

The market and its analysis can be approached in several ways, often complementary to each other. Techniques include technical analysis, sentiment analysis, and on-chain analysis, to name a few. Below, we've selected an approach that is both comprehensive and relatively simple to understand. We've also had success using these metrics to estimate and predict previous BTC tops.

So, what aspects should we evaluate?

Our focus is on understanding the behavior of specific market participants:

• What are the actions of smaller BTC holders?
• How much profit are these holders, who acquired BTC at lower prices, currently realizing?

By examining these metrics, we can gauge the underlying market sentiment. Specifically, the behavior of smaller holders will reveal if retail investors are joining the BTC rally. Analyzing profit-taking patterns will help identify whether a decline in profit-taking—a typical indicator of market tops and established "greed"—is emerging.

Now, let's assess the current situation.

As of November 13th, these conditions haven't fully materialized.

Retail Balances Behavior:

The chart indicates that retail holders began decreasing their balances around October 15th, coinciding with the start of BTC's real rally.

Profit-Taking Analysis:

The profit-taking level appears healthy, with increases correlating to each BTC price jump. At a market top, we expect to see a pattern similar to earlier this year when we indicated a probable peak, see here:

For a more detailed understanding, we have compiled a chart layout that includes these two metrics along with several others. This comprehensive layout can provide additional insights into the market dynamics.

Link to the chart layout

In conclusion, monitoring these two metrics—retail activity and profit-taking—is crucial. Historically, these have been key indicators of retail greed and fear of missing out (FOMO), which often precede market tops. Stay vigilant for these signs as they may hint at the next potential turning point in the market.