According to data from DailyFX, almost four out of five Bitcoin (BTC) investors remain long on the number one digital asset by market capitalisation. This analysis runs contrary to the price performance of Bitcoin over the last twelve months.
The ratio of those investors who remain long on Bitcoin versus those short on the asset is currently at its highest point since November 2018. However, this does not mean we are entering properly bullish territory just yet.
Bitcoin Holders Continue to Hold On
The data by DailyFX was reported by MarketWatch earlier today. Research analyst Fan Xu, of the Forex trading news publication, commented on the findings:
“Bitcoin: Retail trader data shows 77.5% of traders are net long with the ratio of traders long to short at 3.44 to 1… The number of traders net long is 0.4% lower than yesterday and 6.2% higher from last week, while the number of traders net short is 2.7% lower than yesterday and 6.4% lower from last week.”
As mentioned, it was in November of last year that data suggested such strong optimism about the future price performance of Bitcoin amongst the community. At the time, the price of a single Bitcoin was trading around $5,500. It is difficult to say whether the price has followed the crowd’s bullish sentiment. It initially continued its drop coming out of November, reaching a low of just under $3,200 before bouncing to over $4,200. It has since retraced down to its current price of $3,800 at the time of writing.
The MarketWatch piece goes on to speculate that the “sudden turnaround” in sentiment has been caused by a recent altcoin surge. The likes of Ethereum, Litecoin, and the recently forked Bitcoin Cash have all rallied by over 50% since mid-December 2018. Ether, the native digital asset on the Ethereum blockchain, has enjoyed a particularly great end of 2018, posting 85% gains in just 18 days. MarketWatch stated:
“In the past, market watchers have noted altcoins tend to lead rather than lag behind and outperform in crypto rallies, while underperforming in selloffs.”
This view runs contrary to that of controversial yet often-proved-correct YouTube technical analyst Tone Vays. The former Wall Street trader has repeated many times that he does not see the BTC market becoming legitimately bullish until it stops moving in tandem with altcoins (or shit coins, as he refers to all cryptos other than Bitcoin as). Until Bitcoin begins to move out of sync with the rest of the altcoin space, he still believes that much lower prices are coming. He does, however, remain bullish long term:
UPDATE for 2019: I still think we go under $3k
10% – Falls Under $1k as eventual low
40% – Low in $1-2k range
20% – Low in $2-3k range
30% – #Bitcoin has Bottomed!
—–When New ALL TIME HIGH—–
10% – in 2019
40% – in 2020
45% – in 2021
4% – After 2021
1% – Never pic.twitter.com/USPvRdK3Yt— Tone Vays – TheFinancialSummit.com (@ToneVays) December 31, 2018
Similarly, the DailyFX team do not think that the community’s optimism for the most popular digital asset serves as an indicator of impending price rises. In fact, Xu stated that it is more likely to have the opposite effect:
“We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests bitcoin prices may continue to fall.”
Related Reading: Institutions Still Bullish On Crypto: Grayscale Owns 1% of All Bitcoin
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