The rising number of “buy the dip” calls following Bitcoin’s 5% drop over the past week could signal more downside ahead for the crypto market, according to sentiment platform Santiment.
“Clearly, overall, in the markets, people are getting antsy and trying to find some entry spots now that prices have cooled down a bit,” Santiment analyst Brian Quinlivan said in a video published on YouTube on Saturday.
Santiment said in a separate report published on the same day that social media mentions of “buy the dip” have increased significantly amid the crypto market downturn, which may be a warning sign for the market.
“Don’t interpret ‘buy the dip’ chatter as a definitive bottom signal. A true market floor often coincides with widespread fear and a lack of interest in buying,” Santiment said.
“A real bottom often forms when the crowd loses hope and becomes afraid to buy,” Santiment added.
Sentiment is recovering as traders anticipate altcoin season
The total crypto market capitalization is $3.79 trillion at the time of publication, down approximately 6.18% over the past seven days, according to CoinMarketCap.
Meanwhile, Bitcoin (BTC) is trading at $108,748 at the time of publication, down approximately 5% over the same period. On Aug. 14, Bitcoin reached new a new high of $124,128.
It’s often echoed among crypto analysts that prices move opposite to what retail traders expect, and history shows that when more people think the market has reached a bottom, it can actually signal further downside.
Market sentiment is slowly recovering, with the Crypto Fear & Greed Index climbing back to “Neutral” at 48 out of 100 on Sunday, after dipping into “Fear” at 39 out of 100 the previous day.
Some traders are speculating that the crypto market’s pullback from Bitcoin’s recent highs could be a sign that the long-awaited altcoin season is approaching.
“Mega altseason” may be approaching, says trader
Crypto trader Ash Crypto pointed out in an X post on the same day that “Altcoins are now the most oversold ever.”
“Even during the Covid crash, FTX collapse or tariff wars, they weren’t this oversold,” the trader said, suggesting it could be a sign of a “mega altseason” similar to the big rallies of 2017 and 2021.
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On Thursday, CoinMarketCap’s Altcoin Season Index shifted from “Bitcoin Season” to “Altcoin Season,” reaching a score of 60 out of 100 at the time of publication.
Meanwhile, crypto trader Ak47 said, with a “possible Fed rate cut and altcoin ETF approval this fall, the next rally could be huge.”
CME’s FedWatch Tool shows market participants see an 86.4% chance of the US Federal Reserve cutting interest rates for the first time this year in September, which is typically seen as a bullish signal for crypto as investors look for higher returns in riskier assets.
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