Bitcoin price sentiment across cryptocurrency social media has become very positive recently, according to blockchain data provider Santiment. But the company stated that the rising positive sentiment may actually suggest an impending slowdown or correction in the market.
According to Santiment’s report published last Saturday, market rallies driven by overly optimistic sentiment tend to die out quickly. In its explanation, the platform stated that markets tend to do well whenever investors act with caution rather than being overly optimistic about the BTC price.
As reported by Santiment, positive sentiment on cryptocurrencies is now running ahead of negative sentiment by around a 1.5-to-1 ratio on the largest social media networks monitored by the company. The surge in positivity is seen amid Bitcoin rising by 11.5% in the last 30 days. At press time, BTC is trading at $80,858, according to CoinMarketCap.
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Bitcoin Price Confidence Raises Concerns
Crypto investors commonly base their analysis on social sentiment to gauge if the market is ready for an upswing or if a possible market correction is expected. High levels of enthusiasm in the community can indicate a temporary spike in the Bitcoin price.
Crypto Fear & Greed index, the most popular one among all crypto indexes, which shows a “Neutral” status of 47, as of Sunday. Earlier this week, the index was at the level of “Fear”. This indicates that investors remain unsure of their next move in the crypto market.
Santiment further opined that such a correction could serve Bitcoin well in setting up a solid base to make another push higher. The firm believes that in a perfect scenario, a drop in Bitcoin prices to $75,000 could be what is needed to get rid of overly optimistic investors.
Bitcoin Supply on Exchanges Starts Climbing
Additionally, the analytics firm showed a rise in the number of Bitcoins stored on crypto exchanges recently, which contrasts with the prolonged trend of decreasing exchange supplies that implied a transfer of funds into cold wallets.
According to Santiment, the latest rise could be an early indication that some investors are planning on cashing in their gains by virtue of existing prices. It went further to explain that, despite the resurgence in the BTC price, blockchain activity still seems quite subdued.
Bitcoin investors are currently split as to what might happen next to Bitcoin prices. One group thinks there is room for Bitcoin prices to fall further before rising, whereas another faction expects Bitcoin to head towards new local highs.
Michael van de Poppe, who founded MN Trading Capital, stated that he wouldn’t be surprised to see Bitcoin go back to trading within the $70,000-$75,000 bracket before moving ahead on its path upward.
Moreover, cryptocurrency analyst Matthew Hyland said that even if the momentum remains positive, Bitcoin will still be seen rising to $87,000-$95,000 before June.
This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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