Santiment Identifies Best Periods to Buy, Hold, and Sell Bitcoin as Prices Drop to $94K

Crypto behavior resource Santiment highlights the optimal periods to buy, hold, and sell Bitcoin amid the ongoing pullback.

Bitcoin news today: For context, this pullback has caused losses for Bitcoin in five of the last six trading days. The leading crypto asset has dropped 13% from its all-time high of $108,300, now trading around $94,000. Notably, the collapse has triggered a similar downturn for the broader market.

Amid this volatility, Santiment has shed light on the conditions driving these market movements. It noted that investor sentiment, which features the behavior of small traders and large wallets, often dictates Bitcoin’s trajectory.  

Retail investors, who comprise the majority, tend to buy when prices peak and sell during troughs. This pattern plays into the hands of larger players like whales and sharks, who accumulate assets during panic selling.  

A classic instance is the fallout from the FTX implosion in late 2022, which spurred widespread fears of Bitcoin’s demise. Retail panic reached unprecedented levels, creating a surge in negative mentions of Bitcoin across social platforms like Reddit and Telegram. However, this period of intense fear preceded a major rally.

Santiment Suggests When to Buy, Hold, and Sell  

Citing these reactions to sentiment trends, Santiment identified two key groups that drive market movements. These groups are whales and sharks and retail traders. Investors looking to invest in Bitcoin should consider the behaviors of these tiers of holders.

Whales and sharks are wallets holding 10 or more BTC, constituting the most influential stakeholders. These entities tend to accumulate during bearish phases and sell when markets overheat.  

Meanwhile, retail traders are the majority of smaller traders, who often follow emotional and herd-like behavior, buying high and selling low. The data suggests that the best opportunities for profit arise when traders act contrary to the crowd. 

Accumulating during widespread fear—such as during the FTX collapse or similar events—has historically led to significant gains. This represents the optimal time to enter the Bitcoin market.

However, Santiment noted that it is best to hold during periods of accumulation by whales. On the other hand, they suggested that investors could consider selling when speculative enthusiasm reaches irrational levels, such as during meme-coin frenzies.  

Bitcoin Reactions to Latest Sentiment Trends

In the current bull cycle, Santiment called attention to these patterns. Particularly, in late November 2024, following Bitcoin’s rally to $98,000 after Trump’s re-election victory, retail traders grew anxious about a pullback to $90,000.

Some even consistently disclosed plans to buy when BTC drops back to the $90,000 region. However, Bitcoin defied expectations, surging past $103,000 in early December after multiple failed attempts to breach the $100,000 milestone.  

Expectedly, this rapid rally triggered FOMO, with many traders projecting a swift rise to $110,000. Instead, the market moved in the opposite direction of these expectations. Notably, Bitcoin was corrected to $96,000 by Dec. 10. 

However, the rally resumed as bullish sentiment faded, culminating in the new all-time high of $108,300 on Dec. 17. This recovery push again sparked bullish commentaries, as investors anticipated the rally to hit the $110,000 milestone. Nonetheless, BTC has since collapsed, leading to the ongoing pullback.  

Currently trading for $94,278, the crypto asset is now 13% down from the all-time high. This is due to a mix of profit-taking and external factors. Hawkish remarks from Federal Reserve Chair Jerome Powell added to market jitters. However, now that BTC is down, the prevalent sentiment is that a further drop below $90,000 could occur. This could be a precursor to a rebound.