Declining 'Buy The Dip' Mentions Signal Fading Hopium in Bitcoin Market

The latest moves in crypto markets, in context

February 22, 2022

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Market Moves: Bitcoin, equities signal risk reset as West Sanctions Russia for invading Ukraine.
Featured stories: Declining "Buy The Dip" mentions on social media suggest fading hopium.

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:

Michael Sonnenshein, CEO, Grayscale Investments
Ben Schiller, managing editor, features, opinion and research, CoinDesk
Laura Shin, author of "The Cryptopians"

Today's newsletter was edited by Omkar Godbole and produced by Parikshit Mishra.

Market Moves

By Omkar Godbole

Bitcoin and the U.S. stock futures trimmed early losses as the White House, European Union and the U.K. signaled economic sanctions on Russia in response to President Putin's decision to send troops into eastern Ukraine and formally recognized two rebel-held regions in the country.

According to the Financial Times, Boris Johnson, UK prime minister, said the "first barrage of economic sanctions" would be announced on Tuesday, warning that Putin was bent on a "full-scale invasion of Ukraine".

While it is challenging to pin down the exact cause of the recovery in bitcoin and stock futures, the West's decision to steer clear of military engagement and inflict economic damage via sanctions may have calmed fears of a full-scale war and put a floor under asset prices.

"This is a strategic defeat for Putin and a full-scale war is even less likely after today than before," macro fund manager Igor Schatz tweeted.

The going action in the currency markets hints at a continued risk reset in crypto and stock markets during the American hours. The growth-sensitive Aussie dollar and Kiwi dollar were trading 0.5% and 0.64% higher against the safe-haven greenback as of writing and the AUD/JPY was up 0.74%.

Bitcoin was trading near $37,700 at press time, representing a 1.8% gain on the day and the futures tied to the S&P 500 were down 0.3%. The cryptocurrency fell to a 20-day low of $36,250 and stock futures were down 1% during the Asian hours on fears that a war would be impossible to avoid.

Also read: SAND Token, Below 200-Day MA, Joins Broader Crypto Market in Gloomy Outlook

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Crypto Prices

Bitcoin (BTC)

See the latest price here

Ether (ETH)

See the latest price here

The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours:

Biggest Gainers:

Asset	Ticker	Returns	Sector
Bitcoin	BTC	+0.1%	Currency

Biggest Losers:

Asset	Ticker	Returns	Sector
XRP	XRP	−8.6%	Currency
Cardano	ADA	−6.4%	Smart Contract Platform
Cosmos	ATOM	−5.7%	Smart Contract Platform

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

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Latest Headlines

Fading Hopium And Thin Liquidity

By Omkar Godbole

Data tracked by blockchain analytics platform Santiment shows "buy the dip" mentions on social media continue to decline in a sign of fading hopium – crypto slang for hopes of a quick recovery and a continued bull run.

Pullbacks typically end with crowd sentiment leaning cautious or bearish, as is the case now.

"The pattern that we have recognized is a 3 wave of Buy the Dip mentions during the downtrend each lower than the previous one and after 3 waves the bottom occurs before the market recovers," Santiment's market insights blog noted late Monday.

Buy The Dip mentions on social media and bitcoin's price. (Chart by Sentiment)

Market moves could be violent as liquidity measured by average hourly bid-ask spreads is thinner than two months ago.

"Over the past two months, the bid-ask spread for Bitcoin and Ethereum USDT-denominated trading pairs on the biggest exchanges has widened and become more volatile than the previous few months," Kaiko Research's weekly newsletter said.

However, liquidity is much better than what it was during the January price slide.

Kaiko takes into account data from eight major exchanges, including Binance and Coinbase, keep a tab on how liquidity is behaving market-wide.

The price recovery may receive a fillip from the derivatives market activity.

Data provided by Santiment show bitcoin's perpetual futures market was aligned bearish early today, with funding rates or cost of holding long positions dipping into the negative territory.

So, a continued price recovery may force shorts to unwind their traders, leading to an exaggerated move to the higher side.

SHIB's Death Cross

By Omkar Godbole

Meme token SHIB's 50-day moving average (MA) crossed below its 200-day MA, confirming the first death cross, a technical pattern indicating potential for a major sell-off.

That said, the death cross is based on backward-looking moving averages and are unreliable as standalone indicators.

The OGs of NFTs get animated with the biggest stars from around the world in this entertaining new series from CoinDesk TV. Tune in Tuesdays in February at 4 p.m. ET.

ICYMI

In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:

Bitstamp USA on Crypto Markets, Exchange Hacks and eSports, ETHDenver Highlights

Live from ETHDenver, "First Mover" host Christine Lee has highlights from the big Ethereum conference, including an interview with Polkadot lead developer Shawn Tabrizi. Also, Bitstamp USA CEO Bobby Zagotta joins Christine and co-host Lawrence Lewitinn to discuss crypto markets and lessons learned from major exchange hacks. Zagotta is also joined by Immortals CEO Jordan Sherman to discuss their new esports partnership. Plus, Sergey Gorbunov of Axelar on the new funding round that gives them unicorn status.

Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.