BTC Price Plunge Ignites Buy-the-Dip Frenzy While Analysts Predict Further Declines

Bitcoin's sudden downturn sends traders scrambling for bargains as market sentiment splits between opportunity and caution.

DIP BUYING GOES MAINSTREAM

Retail and institutional investors pile into discounted positions, treating the slide as a temporary discount rather than a trend reversal. Trading volumes spike across major exchanges as fear-of-missing-out mentality takes hold.

ANALYSTS URGE CAUTION

Seasoned market watchers point to underlying macroeconomic pressures that could push valuations lower. They cite historical patterns where initial dips often precede more substantial corrections.

THE PSYCHOLOGY OF CRYPTO MARKETS

Market cycles continue to demonstrate how quickly greed can override rational analysis—traders chasing quick profits often ignore fundamental warning signs until it's too late.

As always, the market separates disciplined investors from those just playing with digital lottery tickets.

Deeper Correction Next?

The crypto analytics firm noted that a true market bottom typically forms only after the crowd abandons hope and begins selling at a loss, which then sets the stage for a sustainable recovery.

Santiment observed that Binance traders briefly reached their highest level of short positioning in over three months just before Bitcoin’s latest red candle, only to flip mildly long after the price drop.

For a strong upside move to materialize, the analytics firm said it would prefer to see a steady period of shorts outnumbering longs, as the eventual liquidation of these bearish bets can help fuel a rebound. Meaning, more traders need to bet against Bitcoin for the conditions of a short squeeze to develop.

Crowd sentiment has also shifted considerably in recent days. After bitcoin slipped below $114,000, social media conversations quickly turned from euphoric to fearful, though Santiment said fear levels remain too mild to match the deep panic seen during previous market bottoms, such as the April trough tied to US tariff tensions or the mid-June decline during geopolitical flare-ups in the Middle East.

A sharper spike in fear, what some traders call “blood in the streets,” WOULD be a more reliable sign of capitulation. Despite the noisy retail reactions, key on-chain metrics are sending more constructive signals.

Santiment found that Bitcoin’s 30-day Market Value to Realized Value (MVRV) ratio, which measures the average profit or loss of short-term holders, has fallen back into negative territory for the first time since September 10. Historically, a negative MVRV indicates that recent buyers are now underwater, which creates a statistically favorable environment for accumulation because the risk of buying while others are in profit is reduced.

Meanwhile, large investors continue to quietly build their positions. Wallets holding between 10 and 10,000 BTC have accumulated a total of 56,372 coins since August 27. This steady accumulation by big holders often provides a floor for prices, even when retail sentiment wavers.

Pullback Appears Mild

Another supportive factor is the ongoing decline in Bitcoin supply held on exchanges. Over the past four weeks, exchange reserves have dropped by 31,265 BTC, which implies a decline in immediate selling pressure and limits the amount of coins available for rapid liquidation. This shrinking exchange balance strengthens the case for limited downside in the NEAR term.

Santiment, hence, said that the current pullback, while frustrating for traders, is relatively modest by historical crypto standards. Bitcoin’s 8% drop from record highs pales in comparison to the 15% to 20% corrections that have typically forced capitulation during past cycles. Without a sharper drawdown or a deeper surge in fear, the conditions for a lasting bottom may not yet be in place.

The market appears to be quietly preparing for its next significant move. Retail enthusiasm to buy the dip remains a warning flag that prices could dip further.