The price of bitcoin and other cryptocurrencies tends to rise when social sentiment shows fear, uncertainty and doubt are affecting traders, as the crypto market’s behavior is emotional.
According to crypto analytics firm Santiment, we’ve been seeing a high level of fear, uncertainty, and doubt (FUD) so far this month, which could suggest a BTC price rise in the near future.
CryptoCompare data shows that the price of BTC plunged from nearly $12,000 to a $9,800 low in the beginning of September, and while the cryptocurrency has tested the $11,000 mark since then, a breakout has been rejected. At press time, BTC is trading below $10,500.
The negative price action, Santiment implied, has seen traders turn bearish, believing the flagship cryptocurrency’s price will dip below five-figure territory. It’s worth noting that, on a smaller timescale, when negative sentiment affected the crypto market, BTC’s price recovered to test $11,000 this month.
Per Santiment, bitcoin’s weighted social sentiment on Twitter is now close to two-year lows, indicating a bounce could be close. This could specifically be good for whales, which as CryptoGlobe reported have been accumulating BTC so far this year, according to on-chain data.
The firm’s data is reportedly derived using a machine learning model on a large dataset from Twitter, containing over 1.6 million tweets ranked as either positive or negative. Blackroots co-founder and cryptocurrency trader Cantering Clark revealed on Twitter that charts show BTC could be setting up a trap for short sellers.
It’s worth noting that the crypto Fear& Greed Index is signalling “fear” after signalling “Extreme Greed” last month. The indicator suggests that when “Extreme fear” is being signalled a buying opportunity could arise, while the market could be due to a correction then investors are “getting too greedy.”
In March, when the coronavirus-induced sell-off saw BTC plummet to $3,000, the indicator flashed extreme fear, and the price of BTC surged. Earlier this month, as mentioned above, it dropped after hitting $12,000.
Featured image via Pixabay.