New analysis suggests sentiment among Bitcoin (BTC) traders is at highs not witnessed in two years.
According to the digital asset analytics platform The Tie, cryptocurrency investors quickly became bullish on BTC after the big crash in mid-March.
“Bitcoin’s sentiment (30 day average) is the highest that we have recorded since 2017. 30 day average tweet volumes on Bitcoin are also at 2020 highs.”
Although this may seem like great news for the leading cryptocurrency, a closer look shows the collective herd mentality of crypto traders has at times served as a counter indicator, with bullish sentiment preceding sharp drops in the price of BTC.
The creators of the Fear and Greed Index from Alternative.me describe the phenomenon as a core manifestation of human psychology.
“The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers…
Extreme fear can be a sign that investors are too worried. That could be a buying opportunity. When investors are getting too greedy, that means the market is due for a correction.”
The index currently shows traders are neutral on Bitcoin, a significant shift since last month, when the needle was in the extreme fear zone.
Bitcoin is up 0.33% at time of publishing, at $9,688 according to CoinMarketCap. The king coin has surged 135% since March 12th, when BTC crashed to a low of $4,121.
Analyst Josh Rager says BTC now needs to remain above the $9,150 level to avoid a larger breakdown.
“Nice close by Bitcoin, bounced off support and holding $9,550’s on higher time frames.
For me to feel bullish, want to see a break and close above $10,300’s from here. Break support at $9,150 and we had back down to mid $8,000’s. Trade what the chart gives you.”