Data shows that users on social media platforms were calling for Bitcoin to be sold after its recent crash, a signal that opposing traders may be waiting for.
Bitcoin sentiment on social media has turned completely bearish.
According to data from the analytics company saintSocial media is showing historic levels of fear, doubt and uncertainty amidst the market downturn. The metric of interest here is “social volume,” which basically tells us the degree of discussion around a particular topic or term that users are currently engaging in on major social media platforms.
This metric works by searching posts/topics/messages on these platforms for mentions of the keyword. The metric then counts the number of posts that contain at least one mention.
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The reason Social Volume doesn’t count the mentions themselves is simply that mentions alone don’t contain any information about whether a trend is being followed across social media as a whole.
Sometimes, for example, mentions of a topic may be high, but most of them may be limited to specific circles (i.e. within a few posts). Of course, the social volume will not increase in this case, but it will increase when users across different platforms post about the term.
Now, what the analytics company did here is they applied sentiment-related terms to Social Volume, to differentiate between discussions related to positive and negative sentiment.
Here’s a chart shared by Santiment that shows how the social volume of negative and positive sentiment has changed alongside Bitcoin’s recent volatility:
To distinguish sentiment, the analytics firm chose terms like buy, bottom, and bull for positive sentiment, and sell, top, and bear for negative sentiment.
From the chart, it is clear that the social volume of the latter type of keywords has seen a huge increase along with the decline in the price of Bitcoin. This means that a large number of bearish posts have appeared on social media.
The index also rose during periods of positive sentiment, but the range was clearly lower than during periods of bearishness. In fact, the recent ratio between puts and calls was the largest seen so far this year.
As a result, social media users as a whole seem to be feeling fear and skepticism towards Bitcoin. But this may actually be a positive development for the cryptocurrency, as its price has historically been more likely to move in the opposite direction than the public expects.
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As you can see in the chart, buying orders have risen on several occasions after prices fell last month, but this optimism has only led to continued declines in assets.
With the recent crash, it seems that sentiment has finally turned, with Bitcoin traders starting to give in. “This is an opportunity for some to be real naysayers and buy into the anger and frustration of the masses,” Santiment notes.
Bitcoin price
Bitcoin briefly dipped below the $54,000 level during the decline, but the asset appears to have rebounded to $55,400 since then.
Featured image by Dall-E, Santiment.net, chart by TradingView.com
