DigitalToday reporter Jinju Hong (홍진주) - Amid extreme volatility in the cryptocurrency market, investors are continuing to debate whether it is a “dip” or a “crash.” Bitcoin (BTC) has been making sharp price moves that have surprised analysts day after day. Some argue the market has already entered a stage of collapse, while others counter that it is only a temporary correction driven by excessive fear.

On Feb. 7 (local time), blockchain media outlet Cryptopolitan reported that market intelligence platform Santiment pointed to changes in terminology used on social media as a potentially more important signal than price moves. In a post on X, formerly Twitter, Santiment said there is a clear difference in how traders perceive a “dip” and a “crash.” It said a dip is simply an observation that prices have fallen noticeably, while a crash is when emotion becomes involved.

Santiment said there is no clear formula to distinguish a dip from a crash, but that on social data the moment traders perceive that a “crash has occurred” has served as a highly reliable bottom signal. Chart analysis showed that before bitcoin fell to $60,000 on Feb. 5, social media was dominated by mentions of a “dip.” But once it touched that level, investors were gripped by fear and moved to cut losses, and ironically the price began to rebound shortly afterward.

Coinciding with the rebound, use of the word “crash” surged on social media. Santiment said mainstream media often reacts last but is always active in spreading a “crypto collapse” frame. It said the media is amplifying fear even though bitcoin has already rebounded 13 percent from its bottom. It explained that this ultimately sustains panic among late investors and creates an environment in which large investors can absorb supply from retail investors who have fallen into fear.

So is this decline a “true crash”? Santiment said recent price moves did shock the market, but they differ in nature from crashes the industry has experienced in the past. Bitcoin has fallen about 50 percent from its all-time high of $126,000, but that is because it dropped more than 10 percent in a single day on Feb. 5, accelerating the pace of the correction.

Some investors compare it to the November 2022 FTX collapse and call it “the worst day since then,” but Santiment views such comparisons as exaggerated. During the FTX episode, bitcoin fell more than 70 percent from a peak of about $69,000 in 2021 to around $16,000. That was part of a prolonged crypto winter in which the Luna and 3AC collapses and large-scale leveraged liquidations occurred in succession.

On the worst day then, bitcoin fell about 14 percent and the media poured out pessimism as if declaring the end of bitcoin. Santiment said system risk was materialising at that time, while this decline is closer to a sharp correction amplified by fear than to a structural collapse.

Bitcoin has rebounded quickly after briefly touching $60,000 and is forming a stable zone again. Santiment said the move is not a crash but closer to another painful yet recurring dip, and said the market is finding balance again after investors sold in panic.