Bitcoin's (BTC) break below key support has prompted a flurry of 'buy the dip' calls on social media. However, liquidity trends suggest a potential for a deeper decline.

BTC has dropped over 3% to $111,590 this week, piercing the widely-tracked 50- and 100-day simple moving averages (SMA). Both indicators have lost their upward momentum for the first time since April, now flatlining to signal caution for bulls.

Meanwhile, mentions of "buy the dip" on social media have surged to their highest level in nearly a month, a telltale sign of bullish sentiment among retail investors, according to data tracking platform Santiment. The platform tracks "buy the dip" mentions using its social trends indicator, which analyses the volume of relevant keywords and phrases across Reddit, Telegram and X (formerly Twitter).

A spike in these mentions is considered a contrarian signal by Santiment, meaning the ongoing price pullback in BTC could deepen.

"Prices typically move [in] the opposite direction of the crowd's expectations. So if retail traders believe that $112,200 is finally the time to buy, then a little more pain needs to be felt. Once the crowd stops feeling optimistic, and they begin to sell their bags at a loss, this is typically the time to strike with your dip buys," Santiment said in a market analysis note.

Largest liquidity cluster at $107K

Analysis of order book liquidity also suggests scope for a continued move lower.

According to Hyblock Capital, the deepest liquidity cluster, marked by concentration of buy/sell orders, is seen at $107,000. The level can act as a magnet, pulling the price down, Hyblock explained on X.

Order book liquidity refers to the concentration and availability of buy and sell orders at different price levels in the order book for a specific asset. It reflects market depth and liquidity by showing the volume available to buy or sell at each price.

Large liquidity levels, such as $107,000, can effectively absorb incoming supply and demand, helping to stabilize prices. Additionally, traders often place buy orders near these levels, anticipating a price bounce, which creates a self-reinforcing support effect.

According to Hyblock, smaller but growing liquidity pools are also seen at $109,000 and $111,000.

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