- The crypto market is once again in crisis mode, with investors torn between worry and hope.
- The experts at Santiment have published a study from the “Hope Department” that clarifies the question of when a price decline is a real buying opportunity, i.e. a “dip”.
Santiment combed through social media data, onchain indicators, and historical patterns to identify distinctive signals identifiedwhich occur particularly frequently in uncertain markets. The analysis is becoming increasingly important as the industry’s market capitalization has fallen significantly since the beginning of the year and many customers are looking for helpful guidance.
Extremely negative sentiment as a leading indicator
The first and perhaps strongest signal, according to Santiment, is a period of exceptionally negative sentiment on social media. When discussions are dominated by pessimism, doomsayers and FUD, it indicates that the market is oversold.
Santiment points to historical examples where assets posted double-digit percentage recoveries immediately after such sentiment lows. The analysis shows that extreme fear is often not at the beginning, but at the end of a sell-off.
Investors who recognize this pattern can identify potential turning points early on.
Usage changes from “dip” to “crash”
Another strong signal comes from the community’s choice of words. While terms like “dip” and “setback” tend to indicate a controlled correction, the transition to more drastic terms like “crash” or “goes to 0” often marks a phase of capitulation.
Santiment emphasizes that such linguistic escalation is a recurring pattern that has often occurred shortly before a trend reversal in the past. When investors no longer talk about buying opportunities but rather about existential risks, market sentiment reaches its lowest point.
Negative keywords strengthen the image
The analysis also shows that an accumulation of negative key terms is another element of the overall picture. When terms like “sell,” “down,” and “panic” dominate social media, it reflects a broad loss of trust.
Santiment points out that this collective uncertainty typically occurs when many market participants have already realized losses or are about to do so. Combined with other signals, this increases the likelihood that a bottom has been reached.
MVRV as objective onchain confirmation
In addition to sentiment analysis, Santiment highlights the 30-day MVRV indicator, which measures whether short-term wallets are in profit or loss. If an asset is in the “severely undervalued” zone, it indicates that many investors are in the red – a condition that has historically often led to recoveries.
Santiment emphasizes that particularly strong signals arise when negative sentiment and MVRV undervaluation occur simultaneously. In such phases, the likelihood of a sustained rebound increases significantly.
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