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During a bitcoin crisis, there is something absolutely unusual that one notices: the optimists flock to social media with their #buythedip mentality. There is a sense of looking beyond the horizon and viewing the present market scenario as an opportunity, whether it is in the Bitcoin community or in popular Altcoins in general.
Over the last 24 hours, this has been the case.
According to Santiment, after Bitcoin dipped below the $30,000 mark, its social weighted sentiment reached its lowest position, last witnessed about 12 months back. Such a market condition has been considered extremely valuable in the past, as strong market recoveries have taken place from regions of such sentiment index.
However, for the first time in 2021, it may be prudent to take measures, since #buythedip may no longer be the best bet.
Bitcoin: Is your impatience keeping you from the major dip?
This will be divided into two separate analysis. First, let’s look at where the Bitcoin market is right now.
The #buythedip mentality makes sense based on the daily chart, as Bitcoin has lately entered its demand zone formed earlier this month. The likelihood of a rebound from this range remains strong, and buying pressure should prompt a rapid recovery. Is this a sign that Bitcoin has turned a corner and is on its way to $60,000? More research is needed to address that question.
Zooming out on the chart, the trend remains turbulent (*coughs negative) on a macro-level. The organised range within which Bitcoin has consolidated over the last month is a clear signal that the market may approach another low in the coming weeks. Bitcoin might re-work its way to $35,000 in the next two weeks, but a simple re-test would not prove a positive turnaround.
A significant rejection above $35,000 might signal the start of another decline, with the next demand zone located below $24,000. It is a dire prediction, yet it cannot be disregarded. Buying the present drop does not appear to be a good idea.
Active Addresses have started to decline?
In terms of on-chain fundamentals. The number of active Bitcoin and Ethereum addresses has begun to decline. According to statistics, BTC active addresses have decreased by 24% since peaking in March-May, while Ethereum active addresses have dropped by about 30%.
On a longer time scale, the average active addresses remain high, but the typical variance with price movement isn’t optimal for the market.
So should you buy the dip?
According to Ki Young-Ju, CEO of CryptoQuant, a Bitcoin bear market might have been confirmed over the last 24-hours. Young-Ju mentioned that whale selling on exchanges has taken new heights over the past 24-hours.
As a result, investors should exercise caution before purchasing this specific drop. The odds are stacked against the market right now, so potential investors should be patient and wait for a better ‘dip’ in the future.