The crypto intelligence firm Santiment says Bitcoin is starting to show signals that a sell-off event is on the horizon.
Santiment says BTC is overbought based on three metrics. The first, Daily Active Addresses (DAA) vs. Price Divergence, compares an asset’s price movement to the number of unique crypto addresses interacting with that particular coin on a daily timeframe. The metric views price action that outperforms DAA as a bearish signal, and vice versa.
The second, MVRV Opportunity/Danger Zones, relies on average trader returns from various timeframes to determine danger zones or sell points and opportunity zones or buy points. When average trader returns surge too fast, the metric views it as a bearish signal and vice versa.
The third is Weighted Social Sentiment, which tracks the sentiment of market participants on Twitter.
According to the Daily Active Addresses (DAA) vs. Price Divergence metric, Santiment believes that BTC could be ripe for a significant correction.
“The nine consecutive days of neon red territory on the DAA Divergence model indicates that prices are WAY inflated compared to the growth that unique addresses have seen as the price rose to above $14,000 to end October. Now, with a decline quickly back to $13,400, this could be just the beginning of the bleed. November 2nd marked the single most bearish divergence in over a year.”
It’s the same case for MVRV Opportunity/Danger Zones as Santiment says those who bought BTC recently may succumb to profit-taking.
“Right now, at -79.6%, Bitcoin is looking a lot like an asset that is about to make a lot of BTC FOMO’ers have a bad time.”
As for BTC’s Weighted Social Sentiment, the crypto analytics platform says that the metric is postive which is a bearish signal.
While BTC may be showing signs of bullish exhaustion, Santiment is highlighting one altcoin that looks primed to ignite a bounce.
The crypto insights company says Synthetix Token (SNX) has the potential to rally as the coin’s address activity is “showing signs of life.”
“Yesterday marked the biggest bullish divergence for SNX since September 25th, and if and when altcoins are finally able to have their moment in the sun again, expect this project to see some isolated pumps.”
Santiment also gave SNX a bullish rating on the MVRV Opportunity/Danger Zones metric even after the coin lost 30% of its value over the past week.
“And with so many SNX traders bleeding big right now, its +68% bullish divergence on this model indicates it could be a great time to take a chance if Bitcoin can stay propped up for a while.”
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