Bitcoin Investor Sentiment Is At Two-Year Highs: Here’s Why This Is Dangerous
There’s no denying Bitcoin has completed nicely prior to now few months. Since March’s $3,700 lows reached in a capitulation crash, the main cryptocurrency has rallied over 150%, reaching a multi-month excessive of $10,100 simply two weeks in the past.
This rally has unsurprisingly been accompanied by a robust enhance in bullish cryptocurrency traders, evidenced by the countless stream of optimistic feedback on Twitter and different social media.
But the optimism that Bitcoin holders have right now may very well spell catastrophe for BTC within the brief time period, analysts have advised.
Bitcoin Sentiment Is Reaching a Fever Pitch — and That’s Dangerous for Bulls
In keeping with information shared by crypto analytics firm The TIE, their Bitcoin social media sentiment indicator (30-day common) has reached the “highest” it has been “since 2017” — when BTC was rallying day after day.
Bitcoin’s sentiment (30 day common) is the very best that we have now recorded since 2017.
30 day common tweet volumes on Bitcoin are additionally at 2020 highs. pic.twitter.com/A1IXRaeIPo
— The TIE (@TheTIEIO) Could 18, 2020
This development appears bullish in that sturdy investor confidence means more cash is flooding into Bitcoin.
But, as will be seen within the chart, there have been a variety of events wherein the expansion of The TIE’s sentiment indicator marked the highest of rallies. It’s not an ideal correlation by any means, however it does point out that Bitcoin’s development could also be briefly exhausted.
The rising optimism of cryptocurrency traders has been mirrored within the “Bitcoin Worry and Greed Index” — a proprietary index that surveys volatility, market momentum and quantity, social media traits, surveys, dominance, and Google Developments to try to decide the psyche of merchants.
As one cryptocurrency dealer famous, the index has lately been rubbing up towards two-month highs.
Bitcoin Worry & Greed Index hitting two-month highs, in accordance with dealer Theta Search.
Sure, the index just isn’t but within the “greed” aspect of the gauge, however like The TIE’s sentiment indicator, analysts have discovered that top readings of the Worry and Greed Index can coincide with market tops.
Staying the Course
Bitcoin could also be inclined to a short-term pullback, but analysts imagine the cryptocurrency remains to be on observe to rally parabolically within the coming months and years.
Per earlier experiences from Bitcoinist, Adamant Capital’s Tuur Demeester mentioned in a Could interview with Messari that he thinks BTC won’t ever fall beneath $6,000 once more. That’s to say, he thinks the underside was established throughout March’s crash.
What Demeester expects to return subsequent, in accordance with the interview, is a rally in the direction of $50,000 to $100,000 — a surge of 400% to 900% — within the coming years.
“Whereas retail isn’t flooding again in simply but, he does imagine that establishments, household places of work and billionaires are and that the subsequent cycle may take us to $50k-$100Ok BTC,” Morgan Creek’s co-founding accomplice, Jason Williams quoted him as saying.
The optimism was echoed by Simon Peters, an analyst at eToro who instructed Bloomberg that within the subsequent 18 months, Bitcoin will commerce between $20,000 and $50,000. Like many different analysts and traders, Peters cited the inflationary results of quantitative easing and low rates of interest as a option to again his optimistic remark.
Photograph by Serge Kutuzov on Unsplash