Onchain analytics platform Santiment outlines when investors should acquire, hold, or sell Bitcoin amid marketwide pullback.
The pullback witnessed across the crypto market has soured the Santa Claus rally, which is attributed to the hawkish remarks by the Federal Reserve indicating a slower pace to cut interest rates. The downtrend has left Bitcoin surrendering a chunk of the post-election gains, with five of the past six days in the red zone.
Bitcoin Tumble from ATH
The pioneer crypto asset has tumbled 13% since reaching its peak of $108,300 on Dec. 17 to hover around $94K. The BTC plunge has extended the downtrend to altcoins, with Dogecoin (DOGE) emerging as the worst hit.
Santiment weighs into the volatility, elaborating on the catalysts behind the recent market downtrend. The platform highlights investor sentiment, often indicative of small traders’ and large wallets’ behavior influencing Bitcoin’s trajectory.
Retail investors make up the majority and often buy as prices gain and sell during downtrends. The pattern frequently plays into the plans of the whales and sharks as they buy the dip during the panic selling.
The classic illustration of the fallout emerged following the sudden FTX crypto exchange implosion in November 2022. The collapse spurred a month-long nosedive in Bitcoin’s price.
Santiment attributes the demise to the retail panic that hit peak levels, yielding contagious negative mentions of BTC on several social platforms, including Telegram and Reddit. Nonetheless, the spell of intense fear would precede the huge explosion.
Time to Buy, Hold, and Sell BTC
Citing the ensuing reactions to the prevailing sentiment, Santiment outlines the primary groups driving the price actions. Whales and sharks constitute one group, while the other has retail traders. Consequently, investors pursuing Bitcoin investors should monitor the behaviors exhibited by the two tiers.
Whales and sharks that involve wallets with over 10 BTC exhibit greater influence. Often, they accumulate during the dip phases and sell when the market overheats.
In contrast, retail traders comprise most traders with small BTC amounts and often embrace herd-like behavior. Their emotional vulnerability is portrayed in buying highs and selling during dips. The Santimant data illustrates the best profitable opportunities when contradicting the crowd.
Traders pursuing massive gains should commit to accumulating when the market is engulfed in widespread fear, as witnessed during the FTX collapse. Such is responsible for astronomical gains, thus the optimal time for investors to enter the BTC market.
Santiment observed that the best holding time is when whales are accumulating. The platform indicated that investors should sell BTC whenever the speculative enthusiasm hits irrational levels, as witnessed during the meme-coin frenzies.
How BTC Reacts to Recent Sentiment
Santiment pointed to the sentiment trends observed in the ongoing bull cycle. Late November this year saw Bitcoin surge to test $98,000 following the re-election of Donald Trump after triumphing over Kamala Harris. However, retail traders would encounter anxiety as Bitcoin lost footing, tumbling to $90,000.
Some investors consistently declared plans to add BTC if it dropped to the $90K region.
Bitcoin defied investors’ expectations as it rallied past $103K this month to end failed bids to surpass the $100K level.
The price explosion triggered the fear of missing out, with most traders projecting a surge to $110K. Surprisingly, the market embarked on the opposite direction as BTC corrected to $96K on December 10.
The dip was temporary as BTC rebounded contrary to the fading bullish sentiment to set a new peak at $108.3K on Dec. 17. The rebound evoked bullish commentaries, with most investors projecting a sustained rally to the $110K level.
Ready for Explosive Rally?
Bitcoin has failed to hold above the $100K level following the hawkish news of a slower pace of cuts to the ongoing pullback below $95,000.
Bitcoin is 6.5% down in the past 14 days to change hands at $94,907.54, still 13% below its peak. Besides the remarks by Fed chair Jerome Powell, which add to the existing doubts, profit-taking among investors is a critical factor, too.
Considering that BTC is still surrendering the recent gains, the prevalent sentiment is a further tumble to below $90,000. Per Santiment’s account, such constitutes a precursor to the BTC rebound.
