Surge in ‘buy the dip’ mentions highlights traders’ bullish crypto outlook
The amount of “buy the dip” mentions on social media rose to the highest levels in 22 months, according to data from Santiment. The blockchain analytics firm said the number of social media mentions for the phrase rose to 323, the highest since March 25, 2022.
A significant rise in “buy the dip” mentions across social platforms is an indication of initial high trader optimism for a quick market recovery.
This optimism soared considerably after the crypto market flash crash on Jan. 3, signaling growing awareness among traders about the opportunities lower levels present.
Data from Google Trends reveals user interest in the term “buy the dip” has been on an upward trajectory since the end of November 2023.
Google Trends is a tool that analyzes the popularity of Google Search terms using real-time data.
The above chart shows people have been searching the term “buy the dip” over the last six weeks, impacted by market trends and occasional dips in prices.
People on X (formerly Twitter) were among the most optimistic about prices recovering quickly, with several analysts calling on market participants not to “look for reasons to sell” but “buy the dip.”
Perma bulls and long only don’t look for reasons to sell, only buy the dip. https://t.co/S8ctGjXOh6
— David A. Yablon (@day54) January 4, 2024
Another Jan. 3 post from X user Dust pointed out that “price action on the higher timeframe is calling for a much larger run up in price,” adding that it is a “buy the dip scenario.”
I’ve been extremely bullish on Bitcoin over the last couple of months more so than ever, why is that?
Because the price action on the higher timeframe is calling for a much larger run up in price.
Little dumps don’t matter here.
It’s a buy the dip scenario.
— dust (@DustMacro) January 4, 2024
A spike in the number of calls to buy the dip has historically presented opportunities for patient traders. However, it has also been known to mark deeper corrections.
For instance, spikes in the buy-the-dip calls during the 2021 bull run were followed by deeper pullbacks in prices.
However, the Crypto Fear and Greed Index remains in the “greed” territory, according to Alternative.me. Even though the measure dropped from 73 last week to 68 on Jan. 4, it is an indication that traders are still optimistic about the market continuing the uptrend.
Related: Bitcoin bull market metrics ‘almost reset’ as BTC price hovers at $43K
BTC price drop sparks “buy the dip” sentiment
The surge in the calls to buy the dip followed a sharp drop in the price of Bitcoin (BTC) on Jan. 3, which nosedived as much as 9% from $45,510 to $41,000, levels last seen in December 2023, almost wiping out all the gains made since Jan. 1.
The drop flushed out many leveraged positions, with over $700 million in long liquidations in 24 hours.
The marketwide correction was attributed to a report by digital financial services platform Matrixport retracting its recent forecast that the United States Securities and Exchange Commission would potentially approve the first spot Bitcoin exchange-traded funds (ETFs) in January 2024.
Matrixport claimed that the SEC will reject all spot Bitcoin ETFs in January and that such approvals won’t come before Q2 of this year.
At the time of writing, Bitcoin is tradin at $44,417, up 3.8% over the last 24 hours, according to data from CoinMarketCap.
The long lower wick on the Jan. 3 candlestick suggested that the bulls were buying aggressively on the drawback to $41,000.
All the major moving averages were facing upward, suggesting that the upside was not over. The bulls are now focused on returning to $45,000 and flipping it into support. If they succeed, they would set their eyes on the next major resistance at $50,000.
On the downside, bears could continue profit-taking with the resulting selling pressure pulling Bitcoin toward $42,000 and later $40,000.
Meanwhile, market participants await with bated breath the SEC’s decision on spot Bitcoin ETFs and how the big crypto and, by extension, the wider market will react.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
