mido-finance.com

Social media sentiment for Bitcoin has declined to two year lows which is a good opportunity for investors who want to go against the crowd.

On-chain analytics provider Santiment asserts that Bitcoin and crypto assets usually bounce when social sentiment shows there is a lot of be worried, uncertain and doubtful, which claims that now is a good time to buy.

According to its Bitcoin weighted social sentiment against price chart, this is what is currently happening. Since its weekend lows, Bitcoin prices have recovered around 2.4% to current levels.

It said that this is what has been happening since early September when markets fell $60 billion in terms of total market capitalization” “This is exactly what we’ve been seeing for #Bitcoin, #Ethereum, and many #altcoins following the early September”

The analyst added: “Generally, the best buy opportunities in crypto come when the average trader is down, both psychologically and financially. This is what our metrics currently indicate”

Following the early September drop, when there was also a lot of negative social sentiment, Bitcoin recovered around 12% to top out over $11k, and the same event could happen again.

This latest drop which happened some days ago has resulted in a much smaller drop off for Bitcoin prices with just 7.5% lost to its low of $10,300.

Santiment said that Bitcoin’s weighted social sentiment on Twitter continues to hover around near two year lows showing that there are a lot of doubters in the price level, keeping support at the mid-$10k zone. This would be promising for whales, which tend to go against the crowd.

There was a similar chance with Ethereum where sentiment is also close to two-year lows.

The metric is derived using a machine learning model on a significant quantity Twitter dataset containing over 1.6 million tweets which are ranked as positive or negative.

The analytics provider also mentioned another metric called MVRV which is a ratio that calculates the average profit and loss of different holders to determine whether a coin is currently over or under bought. It shows that more people are currently down which could be a good entry point as there is an average return of negative 3.5% for users over the past 30 days.

Moreover, the Bitcoin Fear and Freed Index has now crashed into the fear zone at 43 which confirms the findings.

Trader and Blockroots co-founder, Cantering Clark, said that the current situation could be shaping up as a bear trap and Bitcoin could be seeing relief in the short term future;

“If you ask me, that looks like an optimal way to set up a trap for any systematic shorts that would get the green light at that point.”

Bitcoin investor Lark Davis believes that regardless of what markets are doing, September is usually a bad month for stock markets and Bitcoin’s correlation could lead to some rocky weeks ahead.