Is Now the Time to Buy Bitcoin Without the Buy the Dip Mentality?

Is Now the Time to Buy Bitcoin Without the Buy the Dip Mentality?


Data shows that Bitcoin investors are hesitant to “buy the dip” despite recent price drops, according to on-chain analytics firm Santiment.

Data shows that Bitcoin (BTC) investors aren’t displaying the “buy the dip” mentality, regardless of the digital currency’s price registering a hit recently.

Bitcoin (BTC) Market Isn’t Showing Any Interest In Buying This Dip

Reports by data from the on-chain analytics company Santiment, the kind of FUD that’s present in the Bitcoin (BTC) market at this time has historically provided good opportunities for the asset.

The indicator of interest here is the “social volume,” which measures the total amount of social media text documents that are as of now talking about a given topic or term (like the name of a cryptocurrency).

The text documents here are a collection of text-based posts that Santiment has amassed from some trending social media websites like Reddit, Twitter, and Telegram.

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To know whether one of these posts is talking about a topic or not, the metric runs a check against the term and finds if there is at least one mention present in the stated document.

The condition of being just one mention implies that posts that contain the term plenty of times still carry the same weight as one that does it only once. The reasoning behind this restriction is the fact that it provides for a more accurate representation of the tendency in the market, as several  users can’t easily skew the figure.

Now, here is a chart that shows how much of the total digital currency social volume (that is, the discussions related to the sector) is being contributed by talks related to buying the dip:

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The value of the metric appears to have declined in recent weeks | Source: Santiment on Twitter

As displayed in the over graph, the social volume for terms related to buying the dip has gone down recently, regardless of the price of Bitcoin (BTC) observing a drawdown below the $27,000 level.

Back in March, when the investment had plunged below the $20,000 level, the indicator’s value had seen some spikes, but they were still at only moderate levels. And once the price had recovered and had seen a sharp rally, on the other hand, that’s when the metric started to spike.

This would suggest that there was little enthusiasm in the market when the actual bottom formation was taking place, while the obstacles in the rally were being lauded as the time to buy.

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A large amount of the spikes likewise took place when that leg of the rally was topping out over the $28,000 level, meaning that the price went against the crowd mentality in this case.

Historically, Bitcoin (BTC) has traditionally become more potential to move in the direction that the majority isn’t expecting, the more the majority predicts the other direction.

Since the social volume of these dip-related terms has remained low during the past few price decline, it appears that the investors are afraid of buying at the present levels.

“We are seeing the common paradox of traders buying short-term, small cryptocurrency price dips, but scared to buy the longer-term bigger ones,” notes Santiment. “Historically, this kind of FUD has been good to capitalize on.”

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Bitcoin Price

At the time of publication, Bitcoin (BTC) is trading around $26,400, down 1 percent in the last week.

Is Now the Time to Buy Bitcoin Without the Buy the Dip Mentality?

Looks like Bitcoin persists to be stuck in the low $26,000 levels | Source: BTCUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, Santiment.net



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