Why traders see a crypto ‘dip’ very differently from a ‘crash’

Social media mentions of crypto “crash” spiked when Bitcoin fell to $60,000 on February 5, causing an immediate price rebound according to Santiment data.

The sentiment analytics platform found that when traders declare a crash has happened rather than simply observing a dip, prices typically bottom and reverse course.

Bitcoin (BTC) recovered 13% from the $60,000 low to reach $67,000 today. However, mainstream media continued amplifying crash narratives after the rebound had already occurred.

Santiment noted this lag allows key stakeholders to buy from panicked retail investors who sell at losses based on delayed coverage.

BitMEX co-founder Arthur Hayes attributed the selloff to dealer hedging tied to iShares Bitcoin Trust structured products rather than organic selling pressure.

Crypto crash mentions function as reliable bottom indicators

Santiment data showed multiple high-frequency spikes in “dip” mentions across social media during January, with January 26 producing a cluster of observations about falling crypto prices.

These mentions serve as bottom indicators but do not generate the severe panic associated with crash declarations.

“Dip” references typically happen when prices decline enough to warrant comment without causing mass liquidations.

“Crash” mentions emerge when panic selling begins, with traders capitulating and selling bags at losses.

The February 5 drop to $60,000 crossed the threshold where traders shifted from observing a dip to declaring a crash.

Hayes links dump to IBIT structured product hedging

Arthur Hayes posted on X that the Bitcoin selloff likely resulted from dealer hedging related to iShares Bitcoin Trust structured products rather than fundamental selling.

Banks issuing structured notes tied to IBIT create hedging requirements that can cause quick price movements as dealers adjust positions.

Hayes stated he is compiling a complete list of bank-issued notes to map trigger points that could cause sharp price rises or falls. “As the game changes, u must as well,” Hayes wrote.