Data shows the social media users have yet to show excessive hype around the latest Bitcoin rally, a sign that could be positive for its sustainability.
Bitcoin Sentiment Ratio Has Spiked, But Value Still Not Too High
According to data from the analytics firm , Bitcoin Fear Of Missing Out (FOMO) has remained low through the latest rally. The indicator of relevance here is the “Positive Sentiment vs. Negative Sentiment Ratio,” which, as its name suggests, measures the ratio between the positive and negative comments around BTC being made on the major social media platforms.
To separate the posts/threads/messages on these platforms between positive and negative, Santiment’s indicator uses a machine-learning model.
When the value of this metric is greater than 1, it means the social media users are making more posts expressing a positive sentiment than a negative one. On the other hand, it being under 1 suggests bearish messages are the norm on these platforms.
Now, here is a chart that shows the trend in the Bitcoin Positive Sentiment vs. Negative Sentiment Ratio over the last few months:
As the above graph shows, this Bitcoin indicator has observed an uplift alongside the latest recovery run in the cryptocurrency’s price. This rally has come as the US Federal Reserve has announced an interest rate cut.
The indicator is currently decently above the neutral mark, meaning that positive posts notably outweigh the negative ones. Historically, the asset has tended to move in a direction opposite to what the crowd is expecting, with the probability of the contrary move going up the stronger this expectation becomes.
A very bullish market can be a warning sign for the BTC price. Despite the recent surge in sentiment, FOMO is not yet at a level where it would be a problem.
The chart shows that the previous spikes in the indicator that occurred around the tops for Bitcoin were of a significantly large scale. The last few months have also seen the indicator generally maintain a positive level, so the metric’s current value isn’t even that out of place when compared to the norm.
“Markets can roll until we see a bullish sentiment spike similar to what we saw during the April 19th and May 21st tops,” notes the analytics firm. If FOMO does end up spiking to high levels in the coming days, BTC could encounter another top.
When that happens, another foray into the negative sentiment zone could be to wait since, as highlighted in the graph, the last two such instances proved to be profitable buying points into Bitcoin.
BTC Price
Bitcoin has enjoyed a surge of almost 6% over the past week, bringing its price back to the $63,200 mark.