Bitcoin Dip Worth Buying? What Market Sentiment Suggests
22 August 2023 - 10:30PM
NEWSBTC
The current sentiment among Bitcoin investors may hold the key to
understanding whether the current drop is a buying opportunity or
not. “Buy The Dip” Optimism Is Fading In The Bitcoin Market In a
new insight post, the on-chain analytics firm Santiment has looked
into how the trader sentiment has shifted in the BTC sector since
the crash a few days back. Related Reading: Will Bitcoin Retest
$20,500 Again? This Pattern May Suggest So First, the analytics
firm has checked for the amount of “buy the dip” types of calls
that have been happening on social media recently. Looks like the
value of the metric had been quite high not too long ago | Source:
Santiment Here, Santiment has made use of its “social volume”
metric, which finds the unique number of social media posts that
are making mentions of a given term or topic. Naturally, the social
volume for Bitcoin/cryptocurrency is taken here, and has then been
filtered for terms like ‘buy’ and ‘dip.’ From the chart, it’s
visible that the social media users were participating in some
heavy discussion around such topics just when the Bitcoin crash
toward the $26,000 level occurred a few days ago. This implies that
the traders were optimistic that the asset would quickly recover
and they believed that the drop presented an ideal buying
opportunity. As the asset has only continued to move sideways since
the crash, however, optimism on social media has appeared to have
slowly vanished, as ‘buy the dip’ calls have plunged. However, this
is not all bad news as Santiment points out. “Believe it or not,
it’s a good sign that people are no longer certain that this is a
dip buy spot,” explains the analytics firm. “It means that
pessimism is beginning to take over again as market caps fade.”
Historically, bottoms have become more probable to form the more
pessimistic about the market the majority of the traders have been.
Thus, this development can potentially allow the coin to recover.
In terms of the social volume broken across the major social media
platforms, it would appear that Redditors have still not given up
hope for a reversal. Buy the dip calls on Telegram, Reddit,
Twitter, and 4chan | Source: Santiment While the overall market
sentiment may have cooled down, it would seem that it hasn’t yet
happened on all platforms equally. But it may provide a unique
opportunity for a good entry point. “When all four social platforms
align and have settled back down to neutral mentions of buying the
dip, this is when the actual opportunity has historically presented
itself for patient traders,” notes Santiment. Related Reading: XRP
Whales Accumulate, Can Price Recover Now? A sign that may not be so
positive can be the fact that the “social dominance” of Bitcoin,
the percentage share of the total social volume of the top 100
assets, has dropped back to normal levels, after briefly hitting
the highest level of 2023 following the crash. The metric's value
has cooled down a bit | Source: Santiment This would mean that
social media users are still engaging in discussions related to
altcoins, which is a sign that there is still greed left in the
market. Ideally, the Bitcoin’s social dominance should remain high.
“High discussion related to the #1 asset coincides with fear,
whereas discussions about more speculative assets tends to coincide
with greed,” says the analytics firm. “Fear is when markets rise.”
Overall, it would appear that the market sentiment is moving in the
correct direction, but it hasn’t yet completely aligned in a way
that has historically been favorable for a Bitcoin rebound to
occur. BTC Price At the time of writing, Bitcoin is trading around
$26,000, down 11% in the last week. BTC has observed a plunge
recently | Source: BTCUSD on TradingView Featured image from
Kanchanara on Unsplash.com, charts from TradingView.com,
Santiment.net
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