Bitcoin (CRYPTO: BTC) has plunged by over $10,000 since its all-time high in July, leaving traders divided on whether the market has one more significant leg up left.
What Happened: Analytics provider Santiment reported on Monday that Bitcoin's drop to $112,200 from its all-time high of $123,800 has sparked the highest "buy the dip" chatter in 25 days.
Historically, however, heavy retail optimism often precedes further downside, raising questions about whether capitulation has occurred.
The retrace, just -8.1% over six weeks, is mild by Bitcoin's standards, as prior cycle corrections typically ran -15% to -20% before panic selling emerged.
Leverage data remains mixed: shorts spiked ahead of the drop but flipped quickly back to longs, muting prospects for a short squeeze rebound.
Social sentiment has grown more fearful, but not yet at extreme capitulation levels that mark cycle bottoms.
On-chain metrics lean bullish.
The latest drop pushed 30-day traders into negative returns for the first time in weeks, historically a favorable setup for accumulation.
Whales have added over 56,000 BTC since late August, and exchange balances continue to decline, pointing to reduced sell pressure.
Also Read: ‘I’m Not A Crypto Person At All’, Says Billionaire Investor Who Sees Bitcoin’s Momentum Stalling
What's Next: Santiment data added that another sign giving confidence is supply of Bitcoin on exchanges has continued to drop, dating back to four weeks ago.
There are 31,265 less BTC on exchanges now, during this relatively short period of time.
This means less coins are available to sell off on exchanges, which again implies limited further downside pressure.
Data also noted that continued declines in exchange supply suggest limited downside pressure.
Analysts argue a cautious dollar-cost-averaging approach around $112,000, $108,000, $104,000, $100,000, and $96,000 could balance risk if the correction deepens while positioning for a sharp rebound.
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