Retail crypto traders have seemingly turned bearish as Bitcoin struggles to recover from a recent dip below $113,000, marking a 17-day low.
“Retail traders have completely changed their stance after Bitcoin dipped below $113,000 and failed to rally,” noted analysts from blockchain analytics firm Santiment on Wednesday.
Santiment reported that the last 24 hours have seen “the most bearish sentiment on social media” since June 22, when fears regarding Middle Eastern conflicts triggered widespread panic sells.
According to Santiment, negative social sentiment can be advantageous for dip buyers, particularly when “fear is at its peak and blood is in the streets.”
Short-term retail traders are also more likely to panic sell or scalp profits compared to long-term investors, or “diamond hands,” who see the asset class as a long-term play.
Santiment remarked that the panic selling is a “positive indicator of a potential dip bounce.”
Bitcoin drops to support zone
Bitcoin (BTC) fell to $112,656 in late trading on Tuesday on Coinbase, according to TradingView, its lowest price since August 3 when it neared support levels around $112,000.
BTC has now seen a retreat of 8.5% from its all-time high of just over $124,000 last week, with the total crypto market capitalization falling below $4 trillion to a two-week low.
Related: What’s causing Bitcoin’s decline, and will $112K act as the final bottom?
The Bitcoin Fear & Greed Index has dropped into “Fear” territory with a rating of 44 out of 100, its lowest since late June.
“Markets tend to move contrary to the crowd’s expectations,” remarked Santiment.
Will bull cycle patterns repeat?
Market corrections during a bull cycle are normal and indicative of a healthy market. Similar pullbacks, often referred to as “bear traps,” have occurred at the same stage in past cycles.
In the 2017 bull market, BTC saw a 36% correction in September before rallying to a new peak three months later.
A similar scenario occurred in September 2021, when BTC corrected 23% before reaching an all-time high later that year.
If history repeats, a comparable correction in 2025 could see BTC dip to as low as $90,000 next month before rebounding to a new all-time high.
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