Data shows users on social media platforms have been calling to sell Bitcoin after its latest crash, a signal that contrarian traders may be waiting for.
Bitcoin Sentiment On Social Media Has Turned Quite Bearish
According to data from the analytics firm , social media is showing historic levels of FUD amid the market drawdown. The indicator of interest here is the “Social Volume,” which basically tells us about the degree of discussion around a given topic or term that users on the major social media platforms are currently participating in.
This metric works by going through posts/threads/messages on these platforms to look for mentions of the keyword. The indicator then counts up the number of posts that contain at least one such mention.
The reason the Social Volume doesn’t simply count up the mentions themselves is that mentions alone don’t contain any information about if the trend is being followed across social media as a whole.
Sometimes, for example, mentions can be high for a topic, but most of them could be limited to niche circles (that is, inside a few posts). The Social Volume naturally wouldn’t spike in this case, but it would when users across the platforms are making posts about the term.
Now, what the analytics firm has done here is that it has applied terms related to sentiment to Social Volume, to differentiate between discussions related to positive and negative sentiments.
Here is the chart shared by Santiment that shows how the Social Volume for negative and positive sentiments has changed alongside the recent Bitcoin volatility:
Looks like both of these metrics have spiked over the past day | Source:
To discern the sentiment, the analytics firm has chosen terms such as buy, bottom, and bullish in the case of positive sentiment, and sell, top, and bearish for negative sentiment.
From the graph, it’s visible that the Social Volume for the latter type of keywords has observed a huge spike alongside the plunge in the Bitcoin price. This would imply that a large amount of bearish posts have popped up on social media.
The indicator has also spiked for terms pertaining to positive sentiment, but clearly, the scale has been lesser than the one for bearish terms. In fact, the latest ratio between sell and buy calls has actually been the largest observed in the year so far.
Thus, it would appear that social media users as a whole are feeling FUD towards Bitcoin. This may actually be a positive development for the cryptocurrency, however, as its price has historically been more likely to move in the opposite direction to what the crowd expects.
As is apparent in the chart, buying calls had spiked on a few occasions following price plunges in the past month, but this optimism had only led to a continued decline for the asset.
With the latest crash, sentiment appears to have finally flipped, with Bitcoin traders starting to give up. “For bold traders, this is a window that some may wish to be a true contrarian and buy into the crowd’s anger and frustration,” notes Santiment.
BTC Price
Bitcoin had briefly slipped under the $54,000 level during the plunge, but the asset appears to have bounced back to $55,400 since then.
Looks like the price of the asset has been seeing a downtrend recently | Source:
Featured image from Dall-E, Santiment.net, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
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