Bitcoin’s ‘Buy-the-Dip’ Narrative Faces Tough Questions as Another 25% Risk Builds

Core Insights - Bitcoin's recent price rebound has sparked renewed interest in the buy-the-dip strategy, but underlying data indicates potential risks in the market [1][7] Price Movement and Market Sentiment - Bitcoin experienced a nearly 15% drop, touching the $60,000 mark, followed by a rebound of over 11%, attracting traders back into long positions [1] - The current price bounce is under scrutiny due to bearish chart patterns, rising leverage, and fragile spot demand, suggesting a potential downside of 25% [1][2] Technical Analysis - The price rebound has formed a bear flag pattern, indicating a possible continuation of the downward trend if the lower trendline is breached, targeting the $48,000–$49,000 range [2] - Despite the rebound, leverage in the market is increasing, with over $540 million in new long positions established on Binance, indicating traders are betting on a market bottom [5] Market Behavior and Supply Dynamics - Bitcoin supply on exchanges has decreased from approximately 1.23 million BTC to 1.22 million BTC, suggesting traders are withdrawing coins in anticipation of higher prices [6] - Public sentiment on social media has turned more optimistic, reinforcing the buy-the-dip narrative, but this optimism may be misplaced given the fragile market structure [7] Long-Term Holder Activity - Long-term holders are exhibiting bearish behavior, with the Long-Term Holder Net Position Change showing significant net selling, worsening from 2,300 BTC on January 6 to approximately 246,000 BTC by February 5 [8]