Bitcoin has another week of range trading and seemingly tougher ups and downs have hit the crypto king’s social data hard. While it can’t be denied that some positive factors like net user growth, whale populations, and cumulative traders point to a healthy long-term course for BTC, the short-term price movement is pretty messy.

First report von Santiment pointed out that daily Bitcoin social media mentions of crypto have plummeted, with the 7-day moving average falling to a half-year low on July 11, Bitcoin’s social volume tested the January 2021 level when it there was no significant increase in trading volume in the previous week.

Social Volume (purple) and Bitcoin Price (green) | Source: Sanbase

Additionally, Bitcoin’s relative social dominance has declined compared to other top-cap investments like ETH, LTC, ADA, and DOT. The graph below shows that retailers’ apathy towards the top coin continues to grow, with Bitcoin’s (orange) social dominance falling from 80.5% to 60.5% in 30 days.

relationship Bitcoin’s relative social dominance over the past 12 months | Source: Sanbase

Looking at the current macro market, it seems that Bitcoin is losing attention faster than expected. Although all rumors seem very negative at the moment, is everything pessimistic about Bitcoin? Just one word: no.

The mostly declining market sentiment is fading. Indeed one report previously stressed that extreme social volume and bullish sentiment seem to coincide with price spikes and short-term corrections as markets become too confident and greedy for their own good. The opposite is the case with Bitcoin right now, the mass talk remains low and the downtrend could be in its favor, suggesting undervalued conditions and potential for a near-term rebound.

While historical performance does not always indicate future results, it is worth noting that Bitcoin’s rebound over the past 2 years has been accompanied by largely bearish sentiment. Keeping track of Bitcoin’s social activities in the near future can help better understand market sentiment towards the top coin.

Bitcoin futures traders are not showing quite a bearish sentiment right now. Bitcoin’s funding rate is 0.01% for both BitMEX and Binance and 0.0076% for Huobi, reflecting more hesitation in the derivatives market than a general bearish consensus. After a sharp decline earlier this month, the number of active addresses has steadily recovered, reaching 853 at the time of going to press.

24-hour active addresses (red) and BitMEX financing rate for open-ended contracts (purple) | Source: Sanbase

Additionally, Bitcoin’s NVT to trading volume ratio, which hit levels in early May, signals a move toward better adoption and higher network value for the asset. This could prove to be a good sign of this in the short term. The number of whale trading operations, which peaked on July 10th, also suggests healthy activity in space.

Number of whale transactions (gold), NVT rate (purple), BTC price (green) | Source: Sanbase

Bitcoin – S&P 500 correlation turns negative for the first time in a year

Bitcoin tried to move away from the $ 32,954 support but failed as the price continually corrected. The trend has been evident since the decline in May, and while BTC managed to rebound just above $ 32,954, it looks pretty tough. At the time of writing, BTC costs $ 32,893 and is up over 1% in 24 hours.

One such repetitive trend causes Bitcoin to lose its correlation with the S&P 500 index and hit negative territory.

Bitcoin correlation with traditional assets | Source: Kaiko

For the first time in 2021, Bitcoin’s correlation with the largest stock index will turn negative. Blended data from Kaiko finds that Bitcoin and the S&P 500 have a vague correlation in the first half of 2021 as both repeatedly break all-time highs during bull cycles.

Bitcoin price, however, has fallen nearly 45% in the past 2 months while the S&P 500 posted a record close of 4384 on Monday and the S&P 500 is up 18.48% year-to-date. This leads to a distinct difference between the two.

The correlation between Bitcoin and gold also decreased. The leading digital asset’s correlation fell into negative territory in March 2021 and continued to fall into negative territory until it recently reversed from -0.4. The S&P 500 Bitcoin Correlation has surpassed the Bitcoin-Gold Correlation as seen in the graph above, noting that the largest cryptocurrency could go its own way when it comes to price rebound.

As Bitcoin lost its connection to traditional assets, its average trading returns also went negative for 6 months. According to Santimnet provided, BTC is undervalued at current levels.

Price of MVRV (red) and Bitcoin price (green) | Source: Santiment

According to Santimnet, historical data suggests this is the right time for long-term (LTH) holders to act. The low value of BTC is seen as an interesting entry point for traders looking to buy large quantities of the coin, and since the price is tied to a range, investors can add buying pressure and help it recover.

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