Market Bottom Not Expected to Arrive When Anticipated, Warns Santiment
Crypto sentiment platform Santiment warns traders not to assume the market has already bottomed, warning that widespread confidence in a bottom often precedes further declines. The company’s warning comes after Bitcoin briefly slipped below $95,000 on Friday during a broader tech-driven selloff. According to Santiment, increasing bottom-is-in sentiment often portends more downside, noting that talk about Bitcoin is becoming increasingly fearful.
Sentiment Analysis Reveals Potential for Further Decline
Santiment has seen a rise in social media rumors that the worst is over, a signal he says often points in the opposite direction. Historically, bottoming occurs whenever psychological thresholds are crossed, such as when Bitcoin falls below $100,000. The company added that the ratio of positive to negative comments on Bitcoin is now at its lowest level in more than a month and “social dominance” has increased to over 40%.
“As Bitcoin’s price fell, its social dominance rose to over 40%, showing that it is the main topic of a very scary discussion,” the report said. Some market participants attributed the decline to strategy chairman Michael Saylor, with mentions of “Saylor” increasing sharply as prices fell. During an appearance on CNBC, Saylor denied rumors that the company had sold any of its bitcoins.
Bitcoin ETF Outflows and Market Bottoms
Santiment also argued that recent spot outflows from Bitcoin ETFs, which totaled $1.17 billion over the past three trading days, could ultimately prove bullish. “Large ETF inflows have often marked local price peaks, while significant outflows have coincided with market bottoms, suggesting retail panic,” the firm said. Thursday alone saw net outflows of $866 million, the second-worst day on record.
The deterioration in sentiment has pushed the Crypto Fear & Greed Index to an “Extreme Fear” reading of 10, its lowest level since February 27. Bitcoin struggled to regain $96,000 after Friday’s sharp decline, reflecting similar conditions seen earlier in the year when the asset plunged from $102,000 to $84,000.
Analysts Weigh In on Market Conditions
Still, some analysts believe the current environment is less severe than previous downturns. Bitwise’s European head of research, Andre Dragosh, said the situation is “not so dire” compared to previous corrections, adding that Bitwise’s sentiment index shows a “positive divergence.” General macroeconomic uncertainty continues to weigh on crypto markets.
Despite the gloomy mood, some analysts see constructive signals in the charts. NorthmanTrader founder Sven Henrich pointed to a “falling wedge pattern” and “positive divergence,” calling them “potentially positive” for Bitcoin bulls. Others note a striking gap between sentiment and fundamentals. Messari research manager “DRXL” said that in eight years in the industry he had never seen “such a disconnect between the headlines and the sentiment,” adding: “Everything we once dreamed of has come true, and yet somehow it feels…over.”
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