By legalizing bitcoin, El Salvador has reassured the bitcoin community, but another euphoric attack on the market hasn’t happened yet. The news from El Salvador has had a good effect on the social activity of the bitcoin community. That’s the conclusion reached by analysts at Santiment. The social activity index jumped to a two-week high when the country decided to legalize the cryptocurrency as a means of payment.
In the middle of last week, the average sentiment of bitcoin-related mentions rose sharply. According to analysts, this means that the bitcoin community is moving into bull market mode. Santiment believes that people see the news from El Salvador as a “springboard for market recovery.”
However, when bitcoin failed to stay above $38,000, sentiment soured again. As of this writing, the average sentiment around bitcoin is back to a mostly bearish range.
Since this was the first major bullish news since the correction, many had high hopes for this event. But the rally didn’t happen, and the current social sentiment on bitcoin looks like the crowd is puzzled, “If this can’t get bitcoin back above $40,000, what can at all?”
The network’s onchain metrics are also weakening. The number of unique daily bitcoin addresses (DAAs), for example, has collapsed to April 2020 levels.
After the correction, the DAA indicator continued its downward trend, falling from 1.26 million addresses on May 12 to 982,000 on June 12 (-18.8%). Nevertheless, at the same time the pressure from sellers is decreasing. The decline in deposit activity suggests that sellers’ pressure on the bitcoin exchange rate will gradually weaken.
Earlier, there were “signs” of bitcoin accumulation by whales, but the overall balance of large bitcoin wallets (with balances of 100-10,000 BTC) began to decline shortly after the cryptocurrency reached $38,000, Santiment found out. Over the past week, the balance of large wallets dropped by 20,000 BTC (~$760 million).
The drop in DAA may indicate a “progressive lack of fundamental support” for bitcoin’s sustained growth, analysts believe. However, the resulting reset in sentiment and onchain activity could support the bitcoin price in the short term before the market “inevitably” faces a new wave of euphoria, Santiment summed it up.