Bitcoin sentiment on social media now reddest since COVID crash, bottom signal?

Data shows that bitcoin sentiment on social media has turned most negative since the COVID crash, indicating that a bottom may be just around the corner.

Bitcoin Weighted Sentiment Has Been Negative Lately

as an analyst Twitter Having said that, BTC sentiment is in deep red right now. The relevant indicator here is the “weighted sentiment” metric from on-chain analytics firm Sentiment, which, as its name already suggests, gives an indication of general sentiment among investors in the cryptocurrency market.

To understand how this indicator works, two other metrics must be looked at first. The first is the “sentiment score,” which analyzes social media posts on major platforms with machine learning algorithms to check whether users are negative or positive about bitcoin right now and discovers overall market sentiment in the score.

Naturally, green values ​​of this score mean that the net sentiment in the market is currently positive, while red values ​​suggest a dominance of negative sentiment.

The other indicator of interest here is “social volume,” which measures the total amount of discussion around an asset that social media investors participate in.

By weighting the sentiment score against this social volume, sentiment is found in the weighted sentiment metric. This means that this metric, for example, will only show highly positive values ​​when market sentiment is positive. At the same time, a lot of discussions are happening on social media too.

Now, here’s a chart that shows the trend in bitcoin-weighted sentiment over the past few years:

The value of the metric seems to have been quite negative in recent days | Source: Santiment on Twitter

The graph above shows that bitcoin-weighted sentiment has recently shown a significant negative bias. This shows that many BTC-related discussions are happening on social media platforms, and the average sentiment contained in them is negative.

From the chart, it is also visible that the current red values ​​are more negative than any spike seen during the COVID-19 crash in March 2020.

Historically, the price of bitcoin has started moving in a direction that the crowd was not expecting. The likelihood of such price action increases and general investors lean towards a particular side.

The cryptocurrency also followed this pattern during the COVID-19 crash, where a deep drop in sentiment became a bottom signal for the price.

Now it remains to be seen whether a similar pattern will be repeated this time as well and whether bitcoin will form a bottom behind this poor market sentiment.

btc price

At the time of writing, bitcoin is trading around $26,000, down 2% over the past week.

Looks like the coin has stagnated over the last few days | Source: BTCUSD on TradingView

Featured images from iStock.com, Charts from TradingView.com, Santiment.net