Bitcoin Sentiment Plummets Amid Bybit Hack: A Potential Buy Signal?

• Extreme fear in Bitcoin sentiment often signals local price bottoms, hinting at a potential rebound despite market panic.
• Historical trends show Bitcoin rebounding after sentiment dips, but external factors like the Bybit hack may impact recovery.
• Social sentiment analysis suggests Bitcoin often moves opposite to retail expectations, making bearish sentiment a possible buy signal.

Bitcoin traders are witnessing extreme fear as market sentiment hits bearish levels following the Bybit hack and other concerning events. According to Santiment, Bitcoin sentiment is now at the same low levels seen on February 17 and 18. 

Notably, both of those past instances preceded price rebounds. While nothing is certain, historical data suggests extreme negativity often aligns with local price bottoms. However, a major exchange hack could still affect long-term perceptions.

Bitcoin Price Dips as Sentiment Turns Bearish

A spike in negative sentiment was caused by the price of Bitcoin plummeting to $95.1K. Reactions on social media reflect trends observed during past downturns. On February 17, negative sentiment peaked, aligning with a Bitcoin price dip. Shortly after, Bitcoin rebounded, proving a strong correlation between crowd fear and local bottoms. Similarly, February 18 saw another wave of fear, followed by a price recovery.

Now, on February 21, another sharp decline has been recorded. A new wave of negativity has set in, as has been observed in the past before the price recoveries of Bitcoin. The recent market decline can be traced to the Bybit hack, which saw massive FUD . Still, historical patterns suggest that if history does repeat itself, Bitcoin may find itself back in recovery mode.

Sentiment Analysis: A Key Indicator for Price Movements

Social sentiment analysis plays a crucial role in predicting Bitcoin price trends. Historically, extreme fear signals a potential bottom, while extreme optimism often precedes corrections. Data from Santiment shows a direct correlation between negative sentiment spikes and Bitcoin price rebounds.

Market psychology suggests that Bitcoin often moves in the opposite direction of retail traders’ expectations. When fear dominates, major price recoveries have followed. If this pattern continues, the current bearish sentiment could indicate an impending uptrend.

Bitcoin’s price remains near $95.9K, with sentiment indicators showing dominant negativity. If market reactions mirror past trends, a price rebound may soon follow. However, traders must remain cautious, as external factors like the Bybit hack could still influence market behavior.