Crowd Buys Dip, Santiment Warns of ‘More Pain’ Pre-FOMC

Santiment reports that a high level of crowd interest in “buying the dip” is a classic contrarian bearish signal in the crypto market. Recently, a $512 million liquidation cascade, predominantly impacting long positions, hit the market ahead of today’s Federal Open Market Committee (FOMC) decision.

CryptoQuant’s on-chain data reveals that long-term Bitcoin holders have sold approximately 325,600 BTC over the past 30 days. This marks the sharpest monthly drawdown since July 2025, signaling increased midterm bearish sentiment among investors.

Santiment’s analysis indicates that midterm crypto market pain may not be over yet. A slight market drop on Tuesday triggered over $512 million in liquidations from leveraged traders. In response, there is now a surge of interest among retail investors eager to “buy the dip.” However, Santiment warns that such high volumes of dip-buying calls are typically contrarian indicators. Historically, this pattern has often been followed by a mild short-term retracement and further downside pressure in the market.

Related: [FOMC Day: Bitcoin Stays Strong as Altcoin Catalysts Build with These 4 Altcoins]

Notably, several altcoins—including Solana (SOL), Litecoin (LTC), and Hedera (HBAR)—have recently seen the listing of their respective spot ETFs after the U.S. Securities and Exchange Commission (SEC) approved generic listing standards, despite the ongoing government shutdown.

### Long Squeeze Impact Amid Low Demand from Whales

Following the $512 million liquidation in the last 24 hours, about $354 million involved long traders. This suggests that midterm leveraged buyers may shift to bearish positions to capitalize on the downward momentum, potentially driving prices lower.

Institutional demand for crypto assets, especially from whale investors, has significantly declined in recent times. For example, U.S. spot Bitcoin ETFs have recorded positive cash inflows over the past few days, but these inflows are markedly lower compared to earlier this year.

In summary, the combination of extensive liquidations, reduced whale demand, and heavy dip-buying enthusiasm presents a cautious outlook for the crypto market. Traders and investors should be prepared for potential further downside before an eventual recovery.
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