El Salvador’s Bitcoin skyrocket is currently failing to attract smart money

Bitcoin (Bitcoin) Wednesday set its best single-day performance since February 8, when Tesla announced that it had added $1.5 billion worth of BTC to its balance sheet.

After El Salvador’s President Naybukler passed legislation to approve it as legal tender, the flagship cryptocurrency surged 11.98% to 37,573 U.S. dollars. In short, this Central American country will now be able to use BTC to price goods and services, and even accept cryptocurrency to pay taxes.

At the same time, Bukele clarified that his government will not impose capital gains taxes on Bitcoin investors.He also announced El Salvador will use too much volcanic energy A few weeks after Tesla CEO Elon Musk ended his Bitcoin payment support due to his amazing carbon footprint, mining cryptocurrency.

Bearish sentiment prevails

But according to Lennard Neo, head of research at the Singapore-based crypto investment fund Stack Fund, El Salvador’s benchmark step to legalize Bitcoin as an upcoming store of value failed to elicit a bullish reaction from “smart” investors.

The Chartered Financial Analyst stated that even after the news from El Salvador, the upward sentiment in the Bitcoin market on Wednesday remained weak. The popular fear and greed index points to “extreme fear”, and during the 11.98% rally of BTC/USD, Bitcoin derivatives contracts from smart currencies were net short.

CME Group’s bitcoin derivatives were mostly short on Wednesday.Source: Econometrics

Neo noted that trading activities also appear to be fragile, adding:

“For a country whose per capita GDP is less than 7% of the United States and whose economy suffered the worst collapse in decades last year, we should not expect a significant impact on Bitcoin.”

Ben Lilly, analyst at Jarvis Labs Provides further anecdotes Although Bitcoin has released its best daily candlesticks in months, why it continues to be bearish is still a real risk. He mentioned the latest surge in BTCUSD Shorts, which recorded the number of margin short positions on the Bitfinex exchange, and the currency pair rose in the spot market on the same day.

“The white vertical line matches the huge change in short interest.”

BTCUSD shorts rose sharply This usually results in a drop in the spot exchange rate of Bitcoin. On the contrary, the BTCUSD short crash indicates that the price is about to rise.

The correlation between spot Bitcoin and BTCUSD short positions. Source: TradingView

Pablo, whale, etc.

At the same time, Lily also brought back “Pablo“Enter his bearish analogy.

The analyst envisioned a fictitious character last year, referring to a Bitcoin wallet owner. According to him, he was selling and pushing the BTC/USD market on various occasions (including the March 2020 crash) Played an important role.

Eli Lilly warned that the anonymous trader was still sitting in a Bitcoin stash he might dump in the future. He added:

“Pablo doesn’t seem to be done yet. He has been taking regular actions since Monday, and there is another round of sitting in the conference hall.”

The CVD indicator adds to the bearish bias in the Bitcoin market. The indicator shared by Lilly implies a surge in Bitcoin sales orders with a transaction volume of between US$100,000 and US$10 million.

Bitcoin sales orders triggered by whales surged.Source: Jarvis Lab

Lily said that market promoters did not support the skyrocketing Bitcoin price in El Salvador, noting that “they let the price fluctuate unimpeded.”

“Where it falls, it falls where.”

At the same time, the Bitcoin Advantage Index, which measures the strength of the benchmark cryptocurrency relative to its rival cryptocurrency, soared from 41.28% to 44.23%.

After the news from El Salvador, the Bitcoin dominance index climbed. Source: BTC.D on TradingView.com

This move indicates that traders are dumping their altcoin positions to seek opportunities in the Bitcoin market, especially when cryptocurrencies become the official legal tender of El Salvador.