Has the Crypto Market Hit Bottom? Watch for These 5 Key Signals

According to crypto research firm Santiment, five particular keywords might hint at a bottom in the crypto market.

Bitcoin’s price dropped by 3% in the past 24 hours amid escalating geopolitical tensions in the Middle East. With growing concerns about how the conflict might impact risk assets, crypto traders are keeping a close eye on potential warning signs.

In a blog post on October 2, Santiment’s marketing director, Brian Quinlavin, explained that when certain words that signal the bottom are frequently used on social media, they may indicate that the market is excessively fearful, which could actually set the stage for a breakout.

“When market sentiment takes a downturn, there’s a noticeable spike in the use of specific ‘fear’ words,” Quinlavin said. These so-called FUD (Fear, Uncertainty, Doubt) terms can paradoxically be a sign that the market is ready to bounce back.”

The first keyword to watch for is “crash.” When social media is flooded with discussions about a crash, it typically means prices have already plunged, and traders are in panic mode. Oddly enough, it’s often around this time that prices begin to recover.

The second and third words are “sell” and “dead.” Just like with “crash,” when traders start using “sell” and “dead” in abundance, it often signals that a recovery could be on the horizon. These moments present opportunities for bold traders to capitalize, as Quinlavin points out.

The fourth fear-related keyword is “crackdown,” referring to regulatory pressures or legal issues. When traders are worried about government crackdowns or potential legal consequences, prices can drop. However, these moments of panic often provide prime buying opportunities when fears are overstated.

Finally, the fifth term is “liquidation.” This word can have different implications depending on market conditions. Liquidation refers to traders being forced out of their positions during sharp price moves, which can occur whether the market is bullish or bearish. On social media, traders often use “liquidation” when they celebrate others, particularly short-sellers, being forced out of their positions. Quinlavin notes that periods of high short liquidations historically create excellent entry points for buyers.

Quinlavin concludes by advising traders to adopt a contrarian view when it comes to social media sentiment, emphasizing that following the crowd isn’t always the wisest move.

“When everyone seems to be aligned in their bearish or bullish sentiments — during extreme events like the FTX collapse or major rate cuts — it’s often a sign that the market is setting up for a shift,” he said.

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