We are dumping.

Last week we've been warning that current setup doesn't look good for Bitcoin - https://insights.santiment.net/read/6189

Current reaction

So far dominating crowd reaction was "buy the dip" according to Santrends:

Typically in such condition (crowd thinks "buying the dip" is the way to go), it will be met with more selling pressure unless we see a bit more concerns. Either it will take time, so we'll be beyond these levels for some time and then we can grow. Or we will see some worrying signs like coming Bitfinex lawsuit on January 15th, may be market is repositioning for this.

So, the current reaction - "buy the dip", "all good" should make you feel cautious. Was similar in the past too, take a look at social volume chart:

This is why we say if we recover we will have one more dump. Crowd may be right but it's never timely right.

What else to observe this week and how to analyze

A good behaviour analyst would always observe reaction of the majority of the crowd to the news. What are the news?

First, market needs to price in upcoming Bitfinex lawsuit. It's coming in 5 days.

The outcome doesn't matter much (yes, you read it right). What does matter is the crowd reaction to it:

- If everyone is relaxed and saying "all good" even with declining price - it's a bad sign.

- If everyone is worrying while the price is correcting - it may be a good sign.

This is important.

Second, the political events in U.S. are not fully priced in. Because it's not clear yet how it ends up.

All this information can be used by big players to their advantage. They simply can decide to move market even more down, scare people out and buy lower. They have no other objectives, right?

So, these are the two key events to observe crowd mass reaction.

Different stories

Fair to say it's way different stories - Bitcoin, Ethereum and alts. Of course they are correlated. But not equal. All three do not grow together all the time. And all three don't dump together all. They follow separate paths.

Mister Altseason? BTC needs to calm down if we want it to come. Take away the uncertainty and people will be willing to risk more. But if it keeps dumping then it's a worrying sign. And not only for alts.

For those considering fundamental metrics we regularly share a bit on our Friday YouTube series. We could still make a new BTC high as we covered in latest stream. Things to watch for: https://www.youtube.com/watch?v=1JnM5D9yIqM&t=1860s

—

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.