Data shows that traders on social media are showing signs of euphoria right now, something that could lead to a setback for the Bitcoin rally.
Bitcoin Social Volume Suggests Rise Of Bullish Bias Among Investors
According to data from the on-chain analytics firm Santiment, BTC traders have turned optimistic on social media after the latest price surge. The relevant indicator here is the “social volume,” which tells us about the amount of discussion that social media users are taking part in related to a given topic.
The metric calculates this in terms of the unique number of posts/threads/messages that are making mentions of the term in question. By “unique,” what’s meant here is that every post is counted only once, regardless of how many mentions it contains of the topic (as long as it contains at least one, obviously).
In the context of the current discussion, Santiment has first used this metric for Bitcoin-related terms to get the info about all the posts discussing the market and has then filtered this social volume for keywords specifically related to sentiment.
To pinpoint the posts related to bullish sentiment, the firm has chosen terms such as “bullish” or “buy.” Similarly, for bearish sentiment, keywords like “bearish” or “sell” have been selected.
Here is a chart that shows the trend in the Bitcoin social volume filtered for the two sentiments over the past month:
The trend in discussions related to the two sentiments | Source: Santiment on X
As displayed in the above graph, the Bitcoin social volume related to bullish terms has observed a notable spike recently, implying that FOMO among the traders on social media has gone up. The bearish sentiment, on the other hand, isn’t at that high level right now.
Historically, the sentiment held by the majority has often played a part in the trajectory of BTC. Usually, the asset tends to move against the expectations of the investors. The further the holders lean towards a particular sentiment, the stronger the possibility of such a contrary move to take place.
From the chart, it’s visible that just earlier in the month, the bearish sentiment had hit some significant levels and what followed was the current rally in the cryptocurrency.
Similarly, the local top a few days ago had also occurred when the market had seen a burst of optimism. Since the bullish sentiment has once again surged among social media users with the latest leg in the rally, it’s possible that another setback may happen for BTC.
Such a pullback could only be temporary, like the previous one was, so long as the market euphoria fades with it. Santiment notes that for further rise, the Bitcoin FUD may need to see some uptick, so that an effect similar to the bearish sentiment spike from earlier in the month can be recreated.
Bitcoin has gone a bit stale following its explosive rise as the asset is still trading around the $34,200 level.
Looks like the price of the coin has moved sideways in the past couple of days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Santiment.net