Over the last week, Bitcoin traders experienced a massive mood swing after the BTC price crashed heavily from the $28K mark. According to on-chain crypto firm Santiment, many had been vocal about their hopes for even steeper price declines, dreaming of accumulating Bitcoin at an even more discounted rate—the allure of the $26,000 mark proved too tempting for many traders to pass up.
What Made Traders Buy BTC At $26K?
Last Thursday saw Bitcoin’s value crash heavily, dropping 7% within a mere 20 minutes and momentarily slipping under the $26,000 mark. As Bitcoin faltered, other major cryptocurrencies like Ethereum followed suit, leading to a staggering $800 million in liquidations. After Bitcoin failed to gain buying pressure to trade above, sellers began their domination, plunging the asset to a low near $25.2K.
Traders expected bigger drops in the BTC price, according to Santiment. However, it witnessed robust purchases near the dip of $25.2K and pushed Bitcoin toward $26K, where bulls gained control and stabilized the price.
Initially, there was a notable surge in “buy the dip” mentions, signaling strong trader confidence in an imminent market rebound. However, this optimistic sentiment has notably waned in recent days. Analyzing ‘dip buy’ mentions across social platforms reveals that Reddit users predominantly believed in a swift price recovery. Their optimism remains slightly elevated compared to other platforms. Meanwhile, Twitter saw a brief uptick in optimism, which has now returned to a neutral region.
Historically, when mentions of ‘buying the dip’ across all four social platforms converge to a neutral sentiment, it often signals a genuine opportunity for patient traders.
Furthermore, post-market crash, discussions about Bitcoin surged to their annual peak. Yet, instead of maintaining this heightened BTC social dominance, it swiftly reverted to typical levels. This suggests traders are now gravitating towards trending altcoins, displaying a hint of “greed.”
Traders’ Short Positions Are Healthy For Bitcoin’s Surge
It’s crucial to note that long-term, 365-day active traders currently hold a modest profit of +5.2%. A simultaneous negative MVRV for both short and long terms, as observed in early March, typically indicates a robust bullish signal.
Additionally, the significant number of open shorts on exchanges is promising. Despite being the highest in over three months, it has led to stable price returns. Prolonged attempts by traders to bet against the markets often result in a price surge to deter shorts and balance funding rates.
Regarding average trading returns, swing traders are experiencing their most significant downturn since early March. With a 30-day average return of -8.5% among active addresses, this suggests a relatively safer opportunity to add on to positions.
As of writing, BTC price trades at $26,084, declining over 0.16% in the last 24 hours. Bitcoin’s 14-day RSI has plummeted below 30, signaling oversold conditions, a level not seen since the March 2020 crash caused by the coronavirus.
An RSI below 30 suggests the price has declined rapidly compared to its recent average, while above 70 indicates overbought conditions. The current sub-30 RSI reading underscores a growing bearish momentum. However, the good sign is BTC might soon recover from its current levels as an upward correction is expected above the current consolidation. As the RSI is in an oversold region, traders might make a reversal from the bottom levels.
Source: https://blockchainreporter.net/bitcoin-traders-dreamt-of-bigger-drops-but-couldnt-resist-the-26k-lure-as-social-dominance-took-a-twist/