Social media trends have echoed the sudden surge in “buy the dip” discussion after last week’s five percent decline in Bitcoin. The analysts at Santiment are sure this increased commentary might as well predict short-term pain in the cryptocurrency market.
Investors usually flock to buy in the correction in anticipation of a swift comeback, but history has proven this zeal most often results in deeper losses. Bitcoin traded at 108,748 dollars on Sunday, five percent less than the previous week, after having reached a recent peak of 124,128 dollars on August 14.
The entire crypto market reflected the same trend, as global capitalization declined by 6.18 percent in the past week to stand at 3.79 trillion dollars. This is yet another signal that anxiety continues to run across desks that trades are possibly retracing bottoms.
The Crypto Fear and Greed Index dropped into “Fear” ranges at 39 last Saturday, as market participants became more cautious. By Sunday, the indicator improved to a “Neutral” value of 48, as preliminary signs to end the downturn in sentiment in traders became apparent.
Bitcoin Traders Eye Federal Reserve Rate Cuts
There are opinions among traders that the current correction may provide the platform for the emergence of a new altcoin cycle, commonly called altcoin season. Analyst Ash Crypto noted that altcoins are more oversold now than in past losses, including the Covid crash and FTX implosion.
Yesterday, CoinMarketCap’s Altcoin Season Index confirmed this viewpoint when it transitioned from “Bitcoin Season” to “Altcoin Season,” reaching 60 from an all-time high of 100. Speculation has risen that traders expect a broad increase in non-Bitcoin values within the coming few months.
The United States Federal Reserve promises a September rate cut, providing additional support to these sentiments in the near future. CME’s FedWatch Tool indicates that market participants are currently assigning this market event a probability of 86.4 percent, representing the first decrease this year. Typically, lower rates trigger investment in risk assets, and in this type of market, analysts believe that cryptocurrencies will rebound greatly.
At the same time, speculation surrounding intensified institutional buying interest has gained traction, underpinned by rumors that this autumn will see approval for altcoin exchange-traded funds. Bulls are convinced these conflicting conditions can trigger the next giant crypto surge, with altcoins poised to take the lead.
