On-chain analysis platform Santiment shows that after U.S. President Trump announced a 100% tariff on China last week, "smart traders" took advantage of the overreaction from retail investors by buying more Bitcoin and other mainstream cryptocurrencies.
Santiment analyst Brian Q stated in a blog on Monday, "Retail sentiment often signals an impending reversal in the prices of Bitcoin and other mainstream cryptocurrencies."
The cryptocurrency market plummeted last Friday due to President Trump's announcement of severe tariffs on China. Brian Q believes this was one of four key moments this year that triggered peak panic among the masses.
Other key moments include the initial announcement of global tariffs in April, and the tensions in the Middle East involving Iran, Israel, and the U.S. in June. In August, concerns about the U.S. Federal Reserve possibly not lowering interest rates also dominated the market, leading to FUD.
He said, "During these moments, smart traders always buy heavily during mass panic."
Santiment data shows that in many similar situations, retail investors quickly return after realizing the news has been exaggerated, benefiting the bottom feeders.
Brian Q noted that during the recent FUD period, discussions related to cryptocurrencies increasingly focused on Trump's trade policy stance, while retail investors exhibited "the highest negative sentiment of the year."
Last Friday, a severe sell-off led to a general market decline. However, after Trump retracted the tariff plan, U.S. Treasury Secretary Scott Bessent also indicated there was a misunderstanding, stating that the tariffs "do not have to be implemented." Subsequently, investors quickly returned to the market.
Brian Q stated, "The cryptocurrency market is driven by sentiment, and traders collectively decide which news affects their confidence in the market. Evidence shows that whenever there is new progress on Trump's tariffs, the market quickly reverses."
Kraken Exchange's survey of 1,248 cryptocurrency users in December 2024 also reflects this trend.
The survey results show that 81% of respondents were driven by fear, uncertainty, and doubt (FUD) when investing. Additionally, 63% admitted that emotional decision-making negatively impacted their portfolios.
Although Bitcoin shows signs of recovery, the cryptocurrency fear and greed index (0 to 100), which measures overall market sentiment, has given a "fear" rating for the second consecutive day, with a score of 38.
On Sunday, the index dropped to 24, the lowest level since April, as market panic and sell-offs intensified. Last week, the index averaged 70, falling within the "greed" range.
Related: Economists say that if history repeats itself, Bitcoin (BTC) could rebound by up to 21% within seven days after a decline.
Original: “Analysts say ‘mass FUD’ is the best signal to buy Bitcoin (BTC)”
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