Bitcoin prices surged more than 3.5% early Thursday, May 14, following passage of the CLARITY Act by the U.S. Senate Banking Committee. However, the flagship cryptocurrency soon reversed to the downside, raising more questions about what is happening within the market. recent An on-chain analysis has surfaced that takes a deep dive into what could move Bitcoin in the short and long term.
Sentiments turned extremely optimistic after the Senate committee vote
Santiment Intelligence, an on-chain analytics firm, posted on social media platform reported Bitcoin crowd sentiment has risen sharply. Crowds have reached one of the most greedy levels for Bitcoin this year, according to a chart shared by the market analytics firm.
This notable surge in sentiment among Bitcoin market participants apparently occurred following news of progress on the CLARITY Act (a 15 to 9 bipartisan vote). For context, the CLARITY Act is a proposed U.S. cryptocurrency regulatory bill designed to create clearer legal and regulatory rules for the digital asset industry.
As Santiment Intelligence explains, progress on the CLARITY Act should be viewed as long-term bullish news for Bitcoin. This is because clearer rules create greater certainty among investors, which in turn increases their willingness to participate in the cryptocurrency market.
Source: @SantimentData on X
However, these developments could indicate bearish pressure on Bitcoin in the near term. This is due to the excessive euphoria caused by the news mentioned above.
“Historically, we advise caution when seeing 1.55 bullish comments for every 1.00 bearish comments for cryptocurrencies’ highest market caps,” the analytics platform said. This is because markets generally move in the opposite direction of the crowd’s enthusiastic expectations.
Bitcoin miners sold $64 million in BTC in 96 hours.
Popular market analyst Ali Martinez reported in a separate post on
The activities of these kinds of market participants are important to the supply dynamics of BTC. This is because they generate new BTC through block rewards and sell it regularly to cover small operating costs. These are mostly different from inactive long-term holders.
In his post, Martinez highlighted that miners have sold approximately 800 BTC in the last 96 hours. This may not be a large sum, but a sudden surge in miner selling could have an impact on short-term market sentiment, ultimately leading to a bearish injection.
Increased miner outflows have historically preceded short-term price weakness or consolidation phases. With the expected effect of market-wide euphoria, it is clear that Bitcoin price may undergo corrective movements in the near term.
At press time, Bitcoin is trading at $79,136, down 2.9% over the past 24 hours, according to CoinGecko data.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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