Bitcoin Traders Start Week With Optimism, Will It Fire Back?
Data shows that Bitcoin traders started this week with bullish sentiment, but here’s why it could come back to the cryptocurrency.
Bitcoin Investors Show Spike in Bullish Sentiment
According to data from on-chain analytics firm Holy, a huge increase in trader optimism in BTC and the wider cryptocurrency market has been seen recently. The relevant metric here is “social volume”, which measures the total amount of text documents that mention a keyword or set of terms at least once.
Here, text documents refer to a collection of social media text files that Santiment pulled from the internet from sources such as tweets, Reddit threads, forum posts, etc. The social volume indicator, therefore, informs us about the degree of discussions that are taking place around a given topic on social media sites.
Something to keep in mind about this metric is that it doesn’t count the pure number of mentions that are occurring of the term in question, but the number of documents/posts that contain it. This means that if there are two documents and one of them contains the keyword once, while the other does it twice, the social volume is still only two here, not three.
Now, here’s a chart showing the trend in social volumes for positive and negative keywords related to the Bitcoin and cryptocurrency market over the past week:
The value of the metric seems to have spiked for positive keywords | Source: Santiment on Twitter
To get an idea about the positive sentiment in the market, Bitcoin social volume is filtered by keywords like buy, bottom, high, etc. Likewise, sell, top, bottom, etc. represent negative sentiment.
On the graph, it is visible that positive sentiment has cooled off over the past weekend, and only a significant spike in negative social volume has occurred.
With the start of this week, however, the social volume of bullish sentiment has risen sharply, meaning that the discussions taking place across the internet now have a positive majority view on BTC and digital assets in general.
A particularly large spike in the indicator was seen yesterday, similar in scale to the positive sentiment spikes seen on the 27th and 29th of March. The first one occurred while BTC was already in the midst of a decline and the other one appeared when BTC was almost reaching a local top.
This means that none of these spikes seem to have caused any bullish effect on the price. This is also something that has been observed many times throughout history, as a lot of positive sentiment can be a sign of euphoria among investors, which often turns out to be bearish for the price.
If these earlier examples are anything to go by, the latest spike in positive sentiment could also have a similar effect on price. “Watch the crowd prematurely get carried away with $30,000,” notes Santiment.
At the time of writing, Bitcoin is trading around $28,200, up 4% over the last week.
Looks like BTC has been moving sideways recently | Source: BTCUSD on TradingView
Featured Image of Dmitry Demidko at Unsplash.com, Charts by TradingView.com, Santiment.net