The rise of ‘buy dip’ refers to traders’ prominent view of crypto
The volume of “buy dip” mentions on social media hit a 22-month high, sentiment data showed. The number of social media mentions for the phrase rose to 323, the highest since March 25, 2022, according to Blockchain Analytics.
A significant increase in “Buy the Dip” on social media shows the first top trader's optimism for a quick market recovery.
This optimism increased significantly after the crypto market blip on January 3, indicating a growing awareness of low levels among traders.
Google Trends data shows user interest for the term “buy deep” has been on the rise since late November 2023.
Google Trends is a tool that analyzes the popularity of Google search terms using real-time data.
The chart above shows when people search for the term “buy dip” over the past six weeks, they are influenced by market trends and occasional price declines.
People at X (formerly Twitter) were among those optimistic that the price would recover quickly, with several analysts urging market participants not to “look for a reason to sell” but to “buy the dip”.
Perma bulls and longs don't just look for reasons to sell, just buy dips. https://t.co/S8ctGjXOh6
— David A. Yablon (@day54) January 4, 2024
Another Jan. 3 post from X-user Dust suggested that “price action on the higher timeframe is asking for a very large price increase,” suggesting a “buy dip situation.”
In the last couple of months I have been more pessimistic about Bitcoin than ever before, why?
Because price action on a higher time frame requires a much larger price increase.
Small wastes are nothing here.
It's buying a dip situation.
— Dust (@DustMacro) January 4, 2024
Increases in the number of calls to buy dips have historically presented opportunities for patient traders. However, it has also been known to show deep corrections.
For example, during the 2021 bull run, large price reversals followed in buy calls.
However, the Crypto Fear and Greed Index remains in the “Greed” territory, according to Alternative.me. Although the indicator fell from 73 last week to 68 on January 4, it is an indication that traders still hope to continue the increase in the market.
RELATED: Bitcoin Bull Market Gauges ‘Reset Near' As BTC Price Hovers At $43K
BTC price decline sparks “Buy the Dip” sentiment
The increase in calls to buy the dip followed a sharp decline in the price of Bitcoin (BTC) on January 3, which reached up to 9% from $ 45,510 to $ 41,000, which was seen in December 2023, wiping out all. Benefits accrued from January 1.
The drop took out many leveraged positions, with more than $700 million in long-term liquidity in 24 hours.
The market-wide correction was triggered by digital financial services platform Matrixport reversing its latest prediction that the US Securities and Exchange Commission would approve its first position in Bitcoin exchange-traded funds (ETFs) in January 2024.
Matrixport said the SEC won't approve all Bitcoin ETFs in January and that such approvals won't come before Q2 this year.
According to CoinMarketCap data, at the time of writing, Bitcoin is at $44,417, up 3.8% in the last 24 hours.
A long lower wick on the January 3 candlestick suggests that the bulls are over-buying the losses around $41,000.
All the major moving averages were looking up, suggesting that the uptrend is not over. The bulls are now focused on returning to $45,000 and flipping to support. If they succeed, they set their sights on the next highest resistance, $50,000.
On the other hand, the bears could continue to take profits with the upcoming selling pressure pulling Bitcoin towards $42,000 and later towards $40,000.
Meanwhile, market participants await with bated breath the SEC's decision on bitcoin ETFs and how the larger crypto and, by extension, the broader market will react.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
