Even as Bitcoin sinks below $100,000, the cryptocurrency market is buzzing with “buy the dip” sentiment. Data from blockchain analysis platform Santiment reveals that online discussions about buying the dip are at an eight-month high, which indicates that many investors see the recent sell-off as a buying opportunity.
The Crypto Fear and Greed Index is still in the greed zone. With a lot of people looking for big gains, there could be more pain ahead.
“The ratio of crypto discussions that are about buying crypto’s dip has reached its highest level in over 8 months. The last time we saw the crowd nearly this enthusiastic about dip buying was the major crash on August 4th. Since that time, Bitcoin’s market cap is +81% higher,” Santiment noted in a statement.
Data shows a clear link between major Bitcoin price drops and increased “buying the dip” sentiment on social media. The crypto Trump rally was great, but it looks like it is over.
Lower Prices to Come?
As reported, the “social dominance score” which tracks mentions of “buying the dip” on social channels climbed to 0.061, the highest level since April 12. That day, Bitcoin fell below $70,000 and extended its correction to around $63,000 the following day.
Data also shows a similar spike in “buying the dip” talks on August 4, when Bitcoin sank under $60,000 and slid further to around $53,000.
Bitcoin began a sharp price correction on Thursday, declining from $102,000 to below $96,000. It is currently trading at $97,700, reflecting a 3.6% decrease over the past 24 hours. Despite this recent downturn, the flagship cryptocurrency still shows a 128% gain year-to-date, per CoinGecko.
Altcoins are faring even worse. Many cryptocurrencies posted two-digit losses in a day. Over the past 24 hours, Dogecoin (DOGE) shed 12%, Ether fell nearly 8% to $3,400, and Solana plummeted 8.6% to $193. Ripple (XRP), meanwhile, saw a decline of 3%.
Rate Worries
Market turbulence intensified following the Federal Reserve’s Wednesday monetary policy meeting, where the central bank announced a 0.25 percentage point cut in interest rates, lowering its benchmark rate to a range of 4.25% to 4.5%.
Despite the widely expected rate cut, market participants focused more on the bank’s approach to monetary policy in 2025. The Fed, however, delivered surprisingly hawkish messages for the coming year.
The Fed projects only two quarter-point rate cuts in 2025, a change from previous projections, where four cuts were anticipated. The Fed’s cautious outlook is influenced by persistent inflation and a robust economy, leading to a more gradual approach to monetary easing.
Fed Chair Jerome Powell stated that the Fed is committed to achieving its target inflation at 2%. The November inflation rate in the US rose to 2.7%, up from 2.6% in October, which matched forecasts but remains above the bank’s goal.
Inflation is still elevated and above the bank’s goal despite economic activity continuing to expand, which prompts the Fed to carefully assess incoming economic data and risks before making further adjustments.
Not only that, the incoming administration of President-elect Donald Trump, sparks widespread concerns about accelerating inflation, though Trump’s proposed economic policies are kept unknown as of now.
Global markets reacted negatively to the Fed’s communication. Stock markets, in the meantime, crashed harder. Major indices suffered losses, with the S&P 500 falling approximately 3%, the Dow Jones Industrial Average dropping around 100 points, and the Nasdaq Composite declining by about 3.6%.
Over $1 trillion was wiped out from the stock markets following the Fed’s policy meeting. Big falls may impact the FED, but inflation is an issue no matter what.
Bitcoin’s price quickly declined below $100,000, dropping to around $98,760 at one point during Powell’s remarks, before recovering slightly later. Yet the Crypto Fear and Greed Index, which gauges the overall sentiment of the cryptocurrency market, still sticks in the greed zone post-FOMC meeting.
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