How to spot "Buy the dip" behaviour in onchain data

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Santrends
Jan 14, 2022

A couple of weeks ago @socialtrends posted an insight on how to read "Buy the dip" calls in crypto social media: https://insights.santiment.net/read/to-dip-or-not-to-dip...-6840


To refresh, this is how the chart looks right now, "Buy the dip" mentions in chats:

As expected, the crowd was wrong. Most 'buy the dip' calls were made far from real bottom.


Now let's have at stablecoins Circulation and Exchange Outflow plotted against BTC price.

This is for USDT:


And this is for DAI:

Observations:

  • "Buy the dip" mentions cluster in the middle of first chart (social volume) can be recognized as Circulation and Exchange Inflow spike for USDT (in the middle of second chart) and a couple of similar spikes around the same local BTC bottom on DAI Circulation and Exchange Inflow chart (third one).
  • The crowd is showing signs of losing interest to the market. Those who wanted to exit, they already done it. Ones decided to hold are really holding.
  • "Buy the dip" excitement is going down, dip is being bought less and less.


Interpretation:

  • Risk/reward ratio feels better and better. The hype is gone, so investors could probably consider starting to enter their positions.


Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.





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Santrends
Jan 14, 2022

Thanks for reading!

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