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Data from blockchain analysis company Santiment shows that Bitcoin’s weighted social sentiment is at its lowest level in two years. This indicator takes into account the overall number of Bitcoin mentions on Twitter and compares the ratio of positive and negative comments on the platform. A few months ago, when Bitcoin began a strong recovery after the market crash in mid-March, social sentiment soared. However, during most of May, June and July, when Bitcoin was consolidating in the low-end range of $9,000, it fell to negative again. Santiment pointed out that contrary to intuition, extremely low levels of negative sentiment are associated with price increases, while extremely high levels are associated with price declines.
Many indicators show that although the price of Bitcoin broke through $11,000 a few hours ago, social and trading sentiment remains low.
On-chain analytics provider Santiment revealed that Bitcoin’s weighted social sentiment is at its lowest level in two years. This indicator takes into account the total amount of Bitcoin mentioned on Twitter and compares the ratio of positive and negative comments on the platform.
A few months ago, when the market crashed in mid-March caused by the pandemic, Bitcoin began a strong recovery and social sentiment surged. However, for most of May, June, and July, when the asset consolidated within the low range of $9,000, it fell into the negative territory again.
The analysis provider pointed out that, contrary to intuition, extremely low levels of negative sentiment are associated with price increases, while extremely high levels are associated with price retracements.
Bitcoin reached a 2020 high of $12,400 in mid-August, but failed to break the 2019 high of $13,800, leading many analysts to assert that the lower high in the long-term frame indicates that we have not entered a bull market.
Another measure of market sentiment is the Bitcoin Fear and Greed Index, which currently shows a neutral value of 48 at the time of writing. This indicator comes from a combination of factors such as volatility, market momentum and volume, social media interaction, market dominance, and current trends.
For most of August, the index was in the “extremely greedy” zone at around 80 due to the trading price of Bitcoin as high as $11,000. There is no doubt that the lowest levels occurred in March and April, when “extreme fear” swept the global market.
The popular charting platform Tradingview also has its own sentiment indicators for assets derived from a variety of technical indicators. In the daily and weekly views, they flashed buying signals, while in a shorter time frame, the situation was more neutral.
For most of this year, Bitcoin is largely related to stock market trends. However, the “September effect” appeared because it was a historical downturn in stock market and cryptocurrency price returns (as Kraken pointed out in its latest update). As Santiment reported, this can be reflected in social sentiment.