The obsession with dips in the cryptocurrency market is not natural. While a 10% correction in the price of the S&P will send the whole of Wall Street crazy, crypto traders are unfazed even at the sight of a 30-40% dip. Infact, in some altcoins, an 80% dip is welcomed with “buy the dip” chants from the ever-vibrant crypto community. Before we look at the hopium-like crypto community, lets see bitcoin’s 2021 journey briefly.
The 2021 Bitcoin
The numero uno cryptocurrency in the world in terms of market capitalization, which stands at a little over a trillion dollars as at this current time, has had an eventful journey over the past ten months. Bitcoin has experienced a topsy-turvy journey in the year 2021, but one fact that can be established is that it has accomplished exponential growth since the past year. Exactly a year ago, bitcoin had a value of around $18,000, but in the latest bitcoin news, bitcoin has achieved a little over 200% increase since then and with an average growth rate of about 90% yearly.
There have been speculations from many crypto enthusiasts that despite the bumpy ride of the crypto market leader, one party argues that it might hit the $100,000 threshold before the year runs out. While other speculators have taken the more conservative approach to claim it might hit another record high, settling at a price of around $75,000 if we get to see another bull run market this year.
But the cryptocurrency has surpassed the record high achieved last month with a $2,000 increase in the early weeks of November. Some crypto news outlets have pointed out the fear of inflation of the digital currency. Small-time players or retail investors have powered this dramatic shift taking advantage of the dip while larger corporations have followed suit. This has always been a factor that has dogged commodities of value since time immemorial. Remember gold? In recent times though, bitcoin and ethereum have gained more value than gold, and individuals and big corporations have found it more valuable to hold onto it as an asset and hope for a future rise in valuation.
Hopium: Gen Z Latest Crypto Jargon
There has been a lot of jargon that has cropped up since the advent of crypto. One can quickly recall the overuse of the word ‘cryptoization’ and ‘dollarization’ in the report released by the International Monetary Fund (IMF) identifying cryptocurrency as a major threat to the world’s financial stability.
Having adopted some terms from the financial market, such as the bullish, bearish, and whales, crypto trends are now tending towards terms akin to the crypto space. The younger crypto enthusiasts, mostly comprised of Gen Zs, have come up with more jargon and slang that have stuck among crypto circles, one of the latest being hopium. Hopium is a pastiche of two words, “hope” and “opium.” The term expressly describes the state where a trader feels an extremely optimistic expectation of ife after taking a substance. This feeling happens to traders when waiting for their tokens to yield profits. However, there is no real basis as most of their feeling is based on market speculation.
Some other crypto jargon that has grown with the bitcoin trend is hodl, FOMO (Fear of Missing Out), mining, pumping, dumping, going to the moon e.t.c
Bitcoin Crowd Appears High on ‘Hopium’ as ‘Buy The Dip’ Trends
There has been a constant weekly drop in BTC value, and it has been a constant phenomenon for digital assets. The reason crypto analysts give is that the weekly cryptocurrency dip is expected due to the recent highs achieved by BTC. Recent figures show bitcoin has achieved a 9% weekly drop, and it is still smarting from that fall. Their majority players in terms of numbers are the small game players. As the current social metrics indicate, the retail players are very positive that there will be a recovery from this brief financial bump and would persist on a bullish run, a hopium situation for crypto enthusiasts.
History has gone in the opposite direction, though concerning the opinions of retail traders. In times gone by, crowd chatter has inclined in a bearish manner anytime there is a downtrend.
If there is one particular phrase that trends the most in any cryptocurrency downward trend, it has been ‘buy the dip.’ The constant feeling in the financial space, which has been adopted by the crypto space, is that when an asset drops in value, it is important that you take advantage of the fall. This applies very much to a very productive asset like bitcoin, which has experienced manic growth since the beginning of the year.
When bitcoin crashed by 11% in around the early days of September, and the “buy the dip” mantra was all over the internet. But since the beginning of the month, that mantra has resurfaced afresh and hit record numbers on social media, with a figure of 952 as recorded by the blockchain analytics platform, Santiment. Those numbers have climbed since then.
The blockchain analytics platform followed up the statistics with a brief comment on the situation. The platform commented that the rise in the “buy the dip” mantra is probably because BTC has yet to find a bottom. Santiment pointed out that the last time that mantra was ubiquitous apart from the September episode was sometime around April and May when BTC price dropped to the levels of around $53,000 and $35,000, respectively, creating a hopium crypto sentiment for bitcoin trading.
During the downward trend of BTC price in September to $43,000, there was a surge of “buy the dip” chatter on social media. A fortnight later, BTC bottomed at $40,000. A parallel situation occurred in May and June. This gives credence to the opinion, as mentioned earlier, that social chatter is proven right when there is a “buy the dip” screams everywhere. There was a massive buy order on Redot.com amongst other trading platforms, and the trend is repeating itself in a like-for-like fashion.
No bull high tops the recent prices that closed in on the $69,000 BTC valuation, and if one is to go with recent crypto history, it is unlikely to trace a recovery to figures near that high. The few mitigating circumstances that crop up are the recent rally of the U.S dollar against crypto and the uncertainty in the U.S surrounding crypto taxation, factors that will stall the purchasers of BTC for a little while. Blockchain data, in the meantime, tend bullish.