- Social media was abuzz with ‘buy the dip’ calls, indicating the market was confident of a recovery.
- While the Fear and Greed Index suggested an accumulation phase, on-chain data showed that BTC risks a further decline.
Calls for market participants to buy the dip increased after Bitcoin on July 3 [BTC] dropped below $60,000. However, the coin wasn’t the only one to fall, as it dragged almost all other cryptocurrency with it, including Ethereum [ETH].
At the time of writing, BTC changed hands at $57,598. This represents a decline of 4.88% in the last 24 hours. Despite the decline, it appeared that more of the market thinks the correction is an opportunity to buy at low prices.
Santiment, the analysis platform for the chain, showed proof of this. Using its social volume metric, AMBCrypto noticed that mentions of “buy the dip” have spread like wildfire.
Source: Santiment
Is the fear enough for a jump?
However, it is not every time that such calls yield results. Specifically, a bounce occurs when a large part of the crypto market doubts whether prices will rise.
Santiment, in his post on X, too agreed with this thesissay that,
“The public is showing signs of seeing this as a buy-the-dip opportunity. Ideally, we wait until their enthusiasm has cooled. The time to buy is when they are impatient and skeptical.”
To get a sense of whether the broader market is skeptical or confident, we examined the crypto fear and greed index. The Fear and Greed Index for Bitcoin and other cryptocurrencies measures the emotional behavior and sentiment of participants.
The value ranges from 0 to 100. Usually people are afraid when the market undergoes a correction and prices reach new red figures. However, greed arises when prices rise in incredible numbers and people do not want to miss this opportunity.
However, if the index is in the extreme greed phase, it means that Bitcoin and the broader market may be due for a correction. But in a state of extreme fear, the market offers a ‘buy the dip’ opportunity.
At the time of writing, the Fear and Greed Index stood at 44, meaning that the the market was in fear. At this stage it may be time to slowly accumulate. But that doesn’t mean the price wouldn’t reach new lows.
Source: Alternative.me
If they do, the market would enter extreme fear, which could serve as the perfect buy-the-dip opportunity.
Bitcoin remains under pressure
In the meantime, blockchain analytics platform IntoTheBlock revealed that Bitcoin had crossed a critical demand zone of $60,000. As such, the next major demand level was between $40,000 and $50,000. It said,
“Bitcoin has breached its $60,000 support level, a critical demand zone. This move leaves more than 16% of BTC holders in a losing position. Historically, demand has been weak just below $60,000, indicating further downward pressure. The next key demand zone is between $40,000 and $50,000.”
Should Bitcoin continue to fall, likely below $56,000, it could slide into the aforementioned region, and this could result in a ton-holder loss. To avoid these types of events, bulls should protect BTC from falling below $55,000.
But that may be difficult to achieve as institutions continue to sell BTC.
Read Bitcoin’s [BTC] Price forecast 2024-25
For example, look at Lookonchain revealed that the German government sent a combined $249.50 million worth of Bitcoin to Coinbase, Kraken and Bitstamp.
When things like this happen, the coin faces selling pressure and the price may not recover. Therefore, market participants may not have an option to continue buying the dip until prices stabilize.