Crypto investors face a new struggle; No idea which dip to buy

A Bitcoin price drop to $60,000 is undoubtedly the biggest dip in over a year, but investors are not quite certain if now is the time to buy.

Crypto markets reeled last week when Bitcoin tumbled to $60,000, a slide that shook confidence in the digital asset market and prompted holders to sell. The decline sparked anxiety among traders, many of whom struggled to decide if the downturn was a buying opportunity or the market was heading deeper into bear territory.

According to market intelligence platform Santiment Feed, there was a surge in negative sentiment during the sharpest phase of the sell-off. In its positive/negative sentiment chart, there was a spike in bearish social commentary and fear just as Bitcoin slipped toward $60,000.

Santiment’s analysis found that when markets drop, online discussions are dominated by pessimistic forecasts. Traders begin predicting further declines, but those sentiment extremes historically led to short-term bottoms.

Bitcoin rebounded after market FUD went extreme, Santiment says

The world’s largest crypto briefly touched $60,001 on Thursday, and what followed was a rebound of nearly 19% in less than 24 hours. Bitcoin reached a high of $71,469 on Friday before a price correction brought it back down to $68,800 by Tuesday. Even with the encouraging comeback, the coin is still down more than 11% for the week. 

Data from CoinGlass showed that about $1.3 billion in long positions across digital assets were liquidated during Bitcoin’s impressive run last Friday. Santiment’s chart showed negativity intensifying as Bitcoin fell below $70,000, with bearish commentary intensifying as Bitcoin began to recover.

The platform also mentioned that social media chatter, including the words “buy,” “buying,” or “bought,” went hand in hand with “dip.” The platform noted such spikes are common during rapid downturns, but cautioned that this metric alone is unreliable as a trading signal. 

The market is still feeling October’s liquidation shock

Crypto markets have arguably not yet recovered since a wave of liquidations in October eroded investor confidence. The absence of stabilizing demand since the year began has done more harm to the industry, as new investor inflows have turned negative, according to analyst IT Tech. 

Over the past 30 days, cumulative capital movement stands at a $2.6 billion net outflow, indicating that last week’s sell-off is not being offset by new participants entering the market. 

In past bull phases, price pullbacks attracted new capital at an accelerating pace. But this year’s dip is not drawing significant new buyers, a pattern that previously dictated early bear-market transitions. 

“Without renewed inflows, upside moves remain corrective. This behavior is consistent with early bear market conditions: contracting liquidity and narrowing participation,” the analyst commented.

Moreover, long-term holders and whales have increased their spending activity in the last thirty days at rates more than new investors are taking positions. The thirty-day cumulative outflows from this group have risen to levels seen near previous-cycle peaks.

Meanwhile, seasoned investors appear to be selling into strength, transferring coins to newer market participants. While this rotation can support markets temporarily, it also raises the risk of supply overhang if demand does not expand.

At the same time, demand has slipped into negative territory, indicating the market’s capacity to absorb distributed supply is weakening. Similar divergences in earlier cycles preceded periods of slowing momentum, during which, in some cases, like the 2021-2022 cycle, markets consolidated for months before prices began rising.

Crypto market has structural weaknesses preventing a bull run

In other related news, CryptoQuant founder Ki Young Ju said Bitcoin lacks the conditions for sustained price acceleration. He noted that in 2024, $10 billion in capital could translate into $26 billion in Bitcoin market value through multiplier effects.

Last year, however, $308 billion in inflows entered the market amid a $98 billion drop in market capitalization. That comparison means heavy selling pressure is dampening the impact of new money, and according to Ju, corporate accumulation and digital asset treasuries approaches do not have enough sway to change the current sentiment. 

“Bitcoin is not pumpable right now. MSTR and DATs won’t work until it becomes pumpable again,” the CryptoQuant founder explained.