Analytics firm Santiment has pointed out how bullish sentiment among social media users has seen a sharp spike alongside the latest Bitcoin rally.
Bitcoin Has Observed A Surge In The Positive/Negative Sentiment
According to data from Santiment, the Positive/Negative Sentiment has crossed into the FOMO zone for Bitcoin recently. The “Positive/Negative Sentiment” here refers to an indicator that compares the bullish and bearish sentiment toward a given asset that’s currently present on the major social media platforms.
The metric works by putting social media posts/messages/threads containing mentions of the asset through a machine-learning model to separate between positive and negative posts. Then, it counts the number of posts in each category and finds the ratio between them.
When the value of the Positive/Negative Sentiment is greater than 1, it means a bullish sentiment is reflected by the majority of social media posts. On the other hand, the metric being under the threshold implies the dominance of a bearish mentality.
Now, here is the chart shared by Santiment that shows the trend in the Positive/Negative Sentiment for Bitcoin over the past month:
As displayed in the above graph, the Bitcoin Positive/Negative Sentiment witnessed a sharp plunge last weekend as the cryptocurrency’s price pulled back from its high above $78,000. At its lowest, the metric went all the way down into what Santiment defines as the FUD zone.
What followed the intense bearish sentiment among social media users was a turnaround for BTC. The asset behaving in the way that goes contrary to the expectations of the majority has actually been a pattern that’s often been observed in the past. Generally, the likelihood of an opposite move goes up the more sure that the crowd becomes. Inside the FUD zone, the traders’ bearish expectation can be strong enough to make bottoms likely.
From the chart, it’s visible that Bitcoin’s turnaround has been accompanied by a sentiment swing in the opposite direction. As BTC has approached the $80,000 mark, the Positive/Negative Sentiment has spiked into the FOMO zone. The analytics firm noted:
Prices can continue to rally, and a breach above this resistance level would be massive in bringing in new and returning traders. However, it will ideally happen when optimism calms down just slightly.
It now remains to be seen how the cryptocurrency’s price will develop in the near future and whether the current degree of greed on social media will influence its trajectory.
BTC Price
Bitcoin has observed its rally stall since its brief venture above the $79,000 mark, a potential sign that the contrarian effect of trader sentiment may already be in action.