Crypto market intelligence platform Santiment says the impact of this week’s cryptocurrency market crash on Bitcoin (BTC) and Ethereum (ETH) could go either way.
The blockchain analytics firm says it has noticed both bullish and bearish signs.
“I’ve seen some TA analysts set $38k as strong support. On the flip side, I’ve also seen a flood of ‘buy the dip’ tweets in the hours after the drop. Looking at the on-chain and social activity of top caps, it’s looking like a ‘good news, bad news’ kind of situation for the time being.”
“Starting with network data, yesterday’s dump has left some signs of weak hand shakeout, which could be a positive sign for the bulls.
The firm says that Bitcoin’s network realized profit/loss (NPL) dropped to a two-month low, suggesting that BTC holders may be selling at a loss.
“We have seen similar ‘capitulation’ dips around several local bottoms for BTC during the May-June correction.”
The average Ethereum fee rose to match its second-highest point ever. Santiment says fee spikes like this are a potential bottom indicators because they may be driven by panic sell-offs and “paper hand” capitulation, although NFT hype may also be contributing to surging ETH fees.
Social mentions of “buy” and “dip” together also soared amid the correction, which correlates to a more bullish bias among retail investors, according to Santiment.
The firm says it sees an uptick in the average social sentiment towards Bitcoin and explains how that could affect the top crypto’s price.
“On the whole, it seems like there’s a fair bit of post-dump excitement on the retail side, which could prove to be an issue in the short term. Just look at the previous spikes in ‘buy the dip’ calls and you’ll notice that they’ve often come early (like back in April and May, respectively), and tend to be accompanied by another leg down before the crowd is finally proven ‘right’.”
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