Analytics provider Santiment claims that bitcoins and cryptocurrencies tend to bounce back when social sentiments indicate that there is a lot of fear, uncertainty, and suspicion, indicating an opportunity to buy now.
According to his likely social position in Bitcoin towards the price charts, this is exactly what happens. Starting with prices this weekend, Bitcoin prices have recovered nearly 2.4% to today’s levels.
He added that this is what has happened since early September when the total market value of the markets decreased by $ 60 billion.
“This is exactly what we’ve seen for #Bitcoin, #Ethereum, and many more #altcoins since early September.”
Added Analysis Provider;
“In general, the best opportunities to buy digital currencies come when the average trader fails, both psychologically and financially. This is what our accounts are currently showing.”
After the start of the recession in September, when there was also a lot of negative social sentiment, Bitcoin recovered about 12%, topping $ 11,000, and the same could happen again.
This latest drop a few days ago led to a much smaller drop in bitcoin prices, dropping only 7.5% to as low as $ 10,300.
Sentiment added that Bitcoin’s weighted social sentiment on Twitter was still hovering around its two-year low, suggesting that there were many skeptics about the price level, while maintaining support in the mid-$ 10,000 area. The report says this would be good news for whales that tend to run against the crowd.
Ethereum had a similar opportunity, with emotions also nearing the bottom line in two years.
The calculation is done using a machine learning model on a large Twitter dataset that contains over 1.6 million positive or negative classified Tweets.
The analysis provider also referred to another calculation called MVRV, which is a ratio that computes the average profit and loss of different owners to determine whether more or less currency has been purchased. This indicates that more and more people are now dropping, which might be a good starting point as the average return for traders over the past 30 days is negative 3.5%.
Additionally, the Bitcoin Fear and Freedom Index has now fallen into fear territory at 43, confirming the results.
Cantering Clark, co-founder and trader at Bluecrot, said the current situation could take the form of a bear trap and Bitcoin could see relief in the near future.
“If you ask me, this appears to be the best way to create a structured short trap that gets the green light at this point.”
Bitcoin investor Lark Davis says that no matter what the cryptocurrency markets do, September is generally a bad month for stock markets, and the Bitcoin correlation could lead to some tough weeks.
At the time of writing, Bitcoin was trading at $ 10,500, up 0.5% on the day but 2.7% on the week.