Market Psychology Shift: Traders Shift Focus from Meme Coins to Bitcoin

Over the past two weeks, the cryptocurrency market sentiment has changed dramatically, with traders shifting from optimism to pessimism. This change in mood has led to a significant adjustment in market capitalization, especially in altcoins. As interest in meme coins like Dogecoin weakens, Bitcoin is experiencing a resurgence in social dominance, indicating a larger shift back to the top cryptocurrencies. This increased fear, uncertainty, and doubt (FUD) phase is a natural part of the market cycle. Smart traders can use this 'blood on the streets' environment to position themselves for potential future profits. The social dominance of Bitcoin is increasing: Its significance for the market Santiment data shows a clear trend of Bitcoin's social dominance. As Bitcoin's price continues to attract the attention of traders, social conversations about cryptocurrencies have increased.

The social dominance of Bitcoin reflects this developing trend, showing that many traders are refocusing on Bitcoin as a safer asset, more established in uncertain market conditions. Meanwhile, the social dominance of meme coins has declined, as shown by the purple line. This decline indicates a decreasing interest in speculative assets, especially in times of market volatility. Market reaction and liquidation: Take a closer look at the data Bitcoin price fluctuations are closely tied to changes in trader sentiment. The BTC price chart shows fluctuations between short-term uptrends and corrections, closely correlated with changes in social dominance. In addition, liquidation plays an important role in assessing market sentiment. Recent data shows a significant increase in short liquidation, especially during a period of price spikes. Large short liquidations were recorded in early August, late November, and early December, suggesting that many traders who bet against Bitcoin were caught by surprise during these price surges.

On the contrary, long liquidations occur during the price adjustment process, with significant events in mid-September and late October. These sudden liquidation events, seen in both short and long positions, reflect an excessively high market leverage. Liquidations typically range from $60 million to $100 million but can spike to over $200 million during extreme volatility, as seen in early August and December. Technical indicators and current prospects of Bitcoin: Where do we go from here?

As of the press time, the trading volume is at $95,851.34, technical indicators are currently showing mixed signals. The relative strength index (RSI) is currently at 41, indicating weak momentum, although it is not yet in the oversold zone. A deeper drop below 30 could trigger a recovery, especially if the market responds to a more favorable macroeconomic environment. The moving average convergence divergence (MACD) indicates bearish momentum, with the MACD line below the signal line. However, the smaller size of the chart bars suggests a decrease in selling pressure, potentially signaling a shift towards stability. DYOR! #Write2Win #Write&Earn $BTC {spot}(BTCUSDT)