Data shows the crypto market sentiment has become less positive in recent days, something that could allow the latest rally to extend further still.
Euphoria Doesn’t Seem To Have Hit Crypto Market Yet
According to data from the on-chain analytics firm Santiment, positive sentiment has declined in the market despite the price surge. The relevant indicator here is the “social volume,” which measures the total number of social media text documents that contain a given keyword.
The text documents referred to here can be a variety of things, like tweets, Reddit threads, forum posts, Telegram messages, and more. These documents are counted on the basis of whether they mention the keyword at least once. If a document contains the term five times, it will still only contribute to the social volume by one unit, not five.
In the context of the current discussion, the keywords of interest are those related to “crypto.” Santiment has calculated the total social volume of such terms and then filtered it for keywords that hint at what the general market sentiment is, to see whether there are more positive or negative mentions related to digital assets currently.
Here is a chart that shows the trend in the social volumes for positive and negative crypto mentions over the past month:
Looks like both the metrics have seen a decline in their values in recent days | Source: Santiment on Twitter
To be more specific, for filtering the social volume for positive sentiment, Santiment has only selected the crypto text documents that contain these keywords: buy, buying, bought, bottom, bottomed, and bullish. Similarly, the firm has chosen these terms for filtering out the negative sentiment: sell, selling, sold, top, topped, and bearish.
As you can see in the above graph, the social volumes of both positive and negative sentiment-related terms have declined in the past week, despite the fact that coins like Bitcoin have seen a sharp rally during the period. This suggests that discussion around the market has gone down recently.
Something to note, however, is that the decline in the negative sentiment has been slower than in the positive sentiment. This means that the two social volumes have approached each other in the last few days, implying that the sentiment is trending toward neutral.
After this shift in the investor mentality, around 5.45% of the total crypto social volume is now made up of positive keywords, while about 3.81% contains negative terms.
Historically, prices of assets in the sector have topped when investors have experienced euphoria (that is, a state of highly positive sentiment), while fear and disbelief have paved way for price surges.
As the market is clearly not experiencing high levels of positive sentiment right now, and on the contrary, is observing the negative sentiment closing in on the gap, there is an improved probability that the rally could continue further.
At the time of writing, Bitcoin is trading around $28,000, up 13% in the last week.
BTC continues to hang onto $28,000 | Source: BTCUSD on TradingView