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Home Cryptocurrency news

Retail Crypto Sentiment Flips Bearish For First Time in 2020

Tony Spilotro by Tony Spilotro
1 year ago
in Cryptocurrency news, Bitcoin
Reading Time: 3min read
crypto contrarian bitcoin bull bear
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The crypto market has recently reached levels of greed after spending much of the second half of 2019 in fear of further downside in the asset class.

However, sentiment has just flipped back to bearish after spending the first two months of 2020 bullish. Could this signal that the crypto market is about to crash? Or could this be a contrarian signal that more upside will surprise retail traders?

Crypto Investors Turn Bearish, Expect Further Downside in Bitcoin

Since the start of 2020, the crypto market has added over 70% in new value to the total aggregate market cap.

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The increase in valuations comes as Bitcoin and altcoins broke free from downtrend resistance and went on a wild rally for over two full months now.

Related Reading | Ancient Math May Be the Key to Making Crypto Bull Market Riches 

While the current local bottom was set in mid-December at $6,400, the low for 2020 so far at $6,800 marked the last time collective retail crypto traders were bearish on Bitcoin and other cryptocurrencies.

Since that date, Bitcoin rose from $6,800 to as high as $10,500 before falling back to current prices.

It’s only now that the rally is over that the greater crypto market has turned bearish once again.

According to a sentiment poll, crypto traders are expecting downside in Bitcoin before new highs are reached. This is the first time voting resulted in a bearish outcome since the start of the year.

#BTC

This is the first time retail sentiment has been bearish since January 2, 2020.#Bitcoin #ETH $XRP pic.twitter.com/AVWIgkBzCP

— TrademastahBTC (@BTCtrademaster) February 24, 2020

Can Contrarian Trading Lead to Profitable Positions?

When 2020 first began, retail crypto investors being bearish suggest that they had been anticipating more downside, meanwhile, the rally was just getting started.

Given the fact that retail investors are usually incorrect in their assumptions – just like their bearish sentiment kicked off the early 2020 rally – it could suggest that Bitcoin and altcoins are getting ready for another leg up.

Another leg up, would likely take crypto traders by surprise, given their expectations of a deeper drop in the days ahead.

The flip in sentiment voting also coincides with the crypto market fear and greed index teetering back toward fear, after spending the last two months in greed territory.

Related Reading | Coronavirus Fear Shakes Up Markets, But Crypto Remains Unaffected 

Even the Oracle of Omaha himself, Warren Buffett champions the contrarian strategy to be fearful when others are greedy and to be greedy when others are fearful.

If Bitcoin pushes up from here, the iconic investor’s theory will be proven once again, and retail crypto investors could be left FOMOing into Bitcoin and altcoins at a much higher price.

But even if Bitcoin falls, crypto traders will simply take advantage and buy the dip, with the expectations of much higher prices leading up to the halving.

Featured image from Shutterstock
Tags: altcoinsbitcoincryptocrypto fear and greed indexsentiment
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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