Bitcoin price has been steadily falling for weeks now, ever since the crypto asset experienced its third-largest one-day surge in its short history on the heels of news that China would be supporting the blockchain technology that the crypto asset is built on.
However, Bitcoin price may be ready to rally once again, according to a social media metric that hasn’t spiked this strongly since the day the China crypto pump began.
Bitcoin Could Pump As Sentiment Returns To Social Media
There are a number of factors analysts will look at to determine the interest level in an asset, traditional or digital. Fundamentals are among the first and most important factors to look at, followed by price charts for technical analysis.
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Sentiment, is yet another important factor, representing the emotional state of investors. Sentiment can be difficult to accurately measure, but through the advent of social media, data can be derived from the chatter occurring in cyberspace that can help determine the level of sentiment in an asset.
According to data from digital asset data provider The TIE, tweet-sentiment – or the amount of Bitcoin-related Twitter activity on the social media platform – has reached the highest level its been since the China pump.
Data from @TheTIEIO shows that bitcoin tweet-sentiment is the highest it's been since the Xi Blockchain announcement. pic.twitter.com/bAZdE2RWfg
— Mati (@MatiGreenspan) November 26, 2019
Back towards the end of October, Bitcoin price had a historic rally, surging from $7,300 to as much as $10,500 in less than 48 hours. But the massive rally was nothing more than a bearish retest of former support turned resistance, and Bitcoin price has been in a downtrend that has only increased in speed and ferocity as the price drops further.
But with the tweet sentiment metric spiking once again, Bitcoin price could see another strong rally if price follows sentiment just like it did following the Xi Jinping news. However, given the first every cryptocurrency falling to extreme lows in recent days, the increased chatter may be negative and therefore bearish.
Why Does Bitcoin Pump When Twitter Chatter Increases?
One theory for why price tends to spike as Twitter sentiment and chatter picks up, could be due to bots programmed to scan for news and general sentiment on social media. As this metric ramps up, bots could pick up on the hype and buzz, and it could cause an increase in buy orders as a response.
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Or of course, the sentiment itself and additional chatter could drive increased interest in Bitcoin and other cryptocurrencies, causing the price to rise. Markets are driven by so many factors, and sentiment is among the most important ones.
Featured image from Shutterstock
