In the past week, the crypto market witnessed a strong correction as Bitcoin fell about 5%, from the record high of 124,128 USD on August 14 to 108,748 USD at the time of writing. The total market capitalization also dropped to 3.79 trillion USD, losing more than 6% in just seven days.
However, it is noteworthy that the trend of calling for "buy the dip" (buy the dip) on social media has surged after this correction. According to the analysis platform Santiment, this excitement may not necessarily signal a market bottom, and could even be a sign of a deeper decline.
The Market Psychology Is Still Fragile
Brian Quinlivan – an analyst at Santiment – stated in a video released on Saturday:
"Clearly, investors are becoming anxious, trying to find an entry point as prices have cooled down."
Santiment's private report also emphasizes that calls to buy the dip on social media often contradict actual bottom regions. Historical facts show that a sustainable bottom typically forms when fear prevails, and investors withdraw instead of excitedly participating.
The Crypto Fear & Greed Index last week had at one point fallen into the "Fear" zone at 39/100, before recovering slightly to 48 (Neutral) on Sunday. This reflects a market sentiment that is fluctuating greatly and is still unstable.
Opportunity for "Altcoin Season"?
While a section of analysts appears cautious, many other traders see this adjustment phase as a golden opportunity for altcoins.
Famous trader Ash Crypto argues that altcoins are currently in a state of "strongest overselling ever," even more negatively than during the collapse due to Covid-19, the FTX shock, or previous trade crises. He believes this could pave the way for a "mega altseason," similar to the explosions of 2017 and 2021.
Supporting this point, the Altcoin Season Index of CoinMarketCap just shifted from "Bitcoin Season" to "Altcoin Season", reaching a level of 60/100 last Thursday.
Another trader with the nickname Ak47 also emphasized that:
The possibility of the Federal Reserve (Fed) cutting interest rates in September. The possibility of approving altcoin ETFs.
These two factors could be strong catalysts for the breakthrough of the altcoin market in the upcoming period.
Expectations for Monetary Policy
According to the CME FedWatch tool, the market is pricing in an 86.4% probability for the scenario that the Fed will cut interest rates in September. This move is often seen as a positive signal for risk assets such as stocks and crypto market.
If this scenario comes true, along with the altcoin sentiment being at an extreme level, it is highly likely that the market could enter a new strong growth cycle. However, as warned by Santiment, investors need to be cautious before rushing into the "buy the dip" strategy.
👉 In summary: Bitcoin is still in a fragile psychological phase, as the buying pressure at the bottom is not enough to confirm a return to an upward trend. However, signals surrounding altcoins and expectations of monetary policy could be catalysts for a new growth cycle in the coming months.
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Bitcoin Faces Downward Pressure, the "Buy The Dip" Mentality May Not Reflect the Market Bottom Yet
In the past week, the crypto market witnessed a strong correction as Bitcoin fell about 5%, from the record high of 124,128 USD on August 14 to 108,748 USD at the time of writing. The total market capitalization also dropped to 3.79 trillion USD, losing more than 6% in just seven days. However, it is noteworthy that the trend of calling for "buy the dip" (buy the dip) on social media has surged after this correction. According to the analysis platform Santiment, this excitement may not necessarily signal a market bottom, and could even be a sign of a deeper decline. The Market Psychology Is Still Fragile Brian Quinlivan – an analyst at Santiment – stated in a video released on Saturday: "Clearly, investors are becoming anxious, trying to find an entry point as prices have cooled down." Santiment's private report also emphasizes that calls to buy the dip on social media often contradict actual bottom regions. Historical facts show that a sustainable bottom typically forms when fear prevails, and investors withdraw instead of excitedly participating. The Crypto Fear & Greed Index last week had at one point fallen into the "Fear" zone at 39/100, before recovering slightly to 48 (Neutral) on Sunday. This reflects a market sentiment that is fluctuating greatly and is still unstable. Opportunity for "Altcoin Season"? While a section of analysts appears cautious, many other traders see this adjustment phase as a golden opportunity for altcoins. Famous trader Ash Crypto argues that altcoins are currently in a state of "strongest overselling ever," even more negatively than during the collapse due to Covid-19, the FTX shock, or previous trade crises. He believes this could pave the way for a "mega altseason," similar to the explosions of 2017 and 2021. Supporting this point, the Altcoin Season Index of CoinMarketCap just shifted from "Bitcoin Season" to "Altcoin Season", reaching a level of 60/100 last Thursday. Another trader with the nickname Ak47 also emphasized that: The possibility of the Federal Reserve (Fed) cutting interest rates in September. The possibility of approving altcoin ETFs. These two factors could be strong catalysts for the breakthrough of the altcoin market in the upcoming period. Expectations for Monetary Policy According to the CME FedWatch tool, the market is pricing in an 86.4% probability for the scenario that the Fed will cut interest rates in September. This move is often seen as a positive signal for risk assets such as stocks and crypto market. If this scenario comes true, along with the altcoin sentiment being at an extreme level, it is highly likely that the market could enter a new strong growth cycle. However, as warned by Santiment, investors need to be cautious before rushing into the "buy the dip" strategy. 👉 In summary: Bitcoin is still in a fragile psychological phase, as the buying pressure at the bottom is not enough to confirm a return to an upward trend. However, signals surrounding altcoins and expectations of monetary policy could be catalysts for a new growth cycle in the coming months.