Why is Bitcoin price down today?

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The crypto market is down today, with the total market capitalization falling by 2.75% to rest at $1.90 trillion on Feb. 21. This movement has increased Bitcoin (BTC) market dominance by 0.25% to 50.77% as a technical divergence points to deeper corrections.

BTC/USD daily chart. Source: TradingView

Let’s investigate the reasons behind Bitcoin’s price decline.

Lack of “new greed” in the Bitcoin market

Data from Google Trends shows searches with the keyword “Bitcoin” reflecting limited interest from retail investors.

This suggests that despite BTC’s 109% run in the last 12 months, retail investors remain sceptical.

Interest in Bitcoin over time. Source: Google Trends

Data from Coinbase also reflects the lack of retail interest in the pioneer cryptocurrency. According to the company’s recent earnings report, retail activity remained low during the last quarter of 2023.

A closer look at the data reveals that the retail activity between Q2 2022 to Q4 2023 remained below Q4 2020 stats, which adds more credence that the retail investors have yet to arrive.

Quarterly retail trading volume. Source: Coinbase earnings report

According to the report, retail transactions, which once accounted for more than 90% of the company’s revenues, are now responsible for only a little under half of the firm’s net revenue.

Additional data from market intelligence firm Santiment supported this narrative saying that even though there was an “interest in $BTC in the weeks directly before and after the # SEC’s approval of 11 # ETFs,” there is a lack of “new greed” in the market.

Bitcoin undergoing a pre-halving retrace

Analysts believe that Bitcoin is at the beginning of the pre-halving phase that historically follows a certain pattern.

Similar to previous halvings, BTC’s price appears to be following the five phases of the Bitcoin halving.

Related: BTC price drops to 1-week low as traders focus on Bitcoin whales, Nvidia

An X social network post from crypto trader and analyst Rekt Capital suggested that the ongoing price action is part of a pre-halving retrace which has seen BTC dip by 38% and 20% during the 2016 and 2020 halving cycles.

Bitcoin’s RSI shows a bearish divergence

BTC price has been increasing since Jan. 22 after the “sell-the-news” impact of the spot Bitcoin ETF approval began fading, and GBTC outlaws slowed as the other spot ETFs saw increased inflows.

The uptrend gained momentum in February with Bitcoin reaching a two-year high of $53,019 on Feb. 20, but the swift sell-off from this level raised alarms.

The BTC/USD 4-hour chart shows a bearish divergence in the four-hour RSI (blue trend line) preceding the price decline. The RSI is a trend-following oscillating momentum indicator used to assess whether a market is overbought, oversold or accumulating.

A bearish divergence from the RSI occurs when an increase in price is accompanied by a momentum decrease, resulting in downward movements.

BTC/USD four-hour chart. Source: TradingView

The bearish divergence could be a hint that the bears are in control of the market and could have plans to pull the price toward the 100-day EMA at $49,234 in the short term.