- In a recent insight post, on-chain analytics firm Santiment highlighted how trader sentiment in the BTC sector has changed since the recent crash.
- It can be seen that social media users engaged in intense discussions on such topics when Bitcoin experienced a crash towards the $26,000 level a few days ago.
- Historically, the formation of a bottom has become more likely based on how pessimistic the majority of traders are towards the market. Therefore, this development could potentially allow for the recovery of the cryptocurrency.
Current social media metrics in Bitcoin reveal that the community has not lost hope and that “buying the dip” calls are significant.
Is the Drop in Bitcoin an Opportunity?
The sentiment among current Bitcoin investors could hold the key to understanding whether the current drop is a buying opportunity. On-chain analytics firm Santiment highlighted how trader sentiment in the BTC sector has changed since the recent crash.
Firstly, the analytics firm examined the prevalence of “buy the dip” calls on social media in recent times.
Here, Santiment used the measure of “social volume,” which finds the number of unique social media posts mentioning a specific term or topic.
Of course, in this case, Bitcoin/crypto social volume was taken and then filtered for terms like “buy” and “dip.” From the chart, it can be seen that social media users engaged in intense discussions on such topics when Bitcoin experienced a crash towards the $26,000 level a few days ago.
This indicates that traders were optimistic about a rapid recovery of the asset and believed the drop presented an ideal buying opportunity. However, as the asset continued to move sideways since the crash, the optimism on social media seems to have gradually faded, and “buy the dip” calls appear to have decreased. Nevertheless, Santiment states that this is not necessarily bad news.
Historically, the formation of a bottom has become more likely based on how pessimistic the majority of traders are towards the market. Therefore, this development could potentially allow for the recovery of the cryptocurrency. In terms of social volume spread across major social media platforms, it can be seen that Reddit users still do not expect a reversal.
While the overall market sentiment may have cooled off, it appears that it has not yet happened equally across all platforms. However, it can present a unique opportunity for a good entry point. Santiment explains it as follows:
“When all four social platforms align and return to neutral words about buying the dip, that’s when the real opportunity historically presents itself to patient traders.”
Bitcoin’s Social Dominance
A potentially less positive sign is that Bitcoin’s “social dominance,” which is the percentage share of total social volume among the top 100 assets, has returned to normal levels after briefly reaching the highest level of 2023 following the crash.
This indicates that social media users are still engaged in discussions about altcoins, which is a sign that there is still some greed in the market. Ideally, Bitcoin’s social dominance should remain at a high level. Santiment continued:
“High discussions about the most important asset align with fear, while discussions about more speculative assets often align with greed. Fear is seen when markets rise.”
Overall, it appears that market sentiment is moving in the right direction, but it does not yet seem to be fully aligned in a way that is historically suitable for Bitcoin’s recovery.
