After Bitcoin failed to recover from the drop below $113,000, retail cryptocurrency traders' sentiment turned bearish.
“Bitcoin failed to rebound and fell below $113,000, with retail traders' sentiment completely turning pessimistic,” said an analyst from blockchain analysis firm Santiment on Wednesday.
Santiment also reported that there has been the most pessimistic sentiment on social media in the past 24 hours since June 22, when fears of war in the Middle East triggered panic selling.
However, Santiment noted that for those investors inclined to buy on dips, negative social sentiment is a good opportunity, especially when market panic spreads.
Short-term retail traders are more easily panicked into selling or engaging in short-term arbitrage than long-term investors.
Santiment states that the current panic selling is a 'good sign of an impending rebound.'
Bitcoin enters the support zone
According to TradingView data, Bitcoin fell to $112,656 on Coinbase late Tuesday, the lowest price since August 3.
Bitcoin has now fallen 8.5% from last week's all-time high of $124,000, while the total market capitalization of the entire cryptocurrency market has dropped below $4 trillion.
Meanwhile, Bitcoin's Fear and Greed Index has dropped to 'Fear' at 44 points, the lowest level since the end of June.
Will the bull market cycle history repeat?
Market corrections during a bull market cycle are not new; they are a healthy part of a larger cycle. This pullback, often referred to as a 'bear trap,' has occurred in the same phase of previous cycles.
During the bull market in 2017, Bitcoin corrected by 36% in September and then surged to new highs within the next three months.
If history repeats, a similar correction may occur in 2025, with Bitcoin potentially dropping to $90,000 next month before reaching new highs.
