Data shows Bitcoin’s retrace below the $117,000 level came right after a major spike in social media chatter, often a contrarian signal.
Bitcoin Social Dominance Increases as BTC Passes $123,000
It’s a brand new world post Santiment, an analytics company, has shown on X how the social media community reacted when the Bitcoin price broke out. Here, the key indicator is the “Social Dominance,”This tells you the percentage of the social media conversations that a given coin has in relation to the 100 top cryptocurrencies.
It is calculated using another indicator, called Social Volume, which gauges the unique number of posts/threads/messages on major social media platforms that mention an asset. The reason the Social Volume doesn’t simply count up the mentions themselves is so that a few social media circles with a large amount of discussion don’t skew the data by themselves. The metric’s value only spikes when talk around the asset is more spread out.
This is a measure of how much a cryptocurrency contributes to the total Social Volume for the 100 biggest coins ranked by market capital.
Here is the chart showing the trends in Bitcoin’s metric over the past two years.
The graph above shows that the Bitcoin Social Dominance reached a new high of 43 percent when the price reached a record high over $123,000. The asset received mentions from almost half the discussions on social media about digital assets.
This latest surge is the highest in the past two years and shows the dominance that BTC has achieved over the mindshare during this rally. BTC has dropped in price since social media chatter has increased.
This isn’t anything too unexpected, as Bitcoin and other digital assets have historically tended to move in the direction that goes contrary Expectations of retail customers. Prices can fall when social media users become overly excited. A fearful excess can also lead to a price correction.
“Though it’s generally a fantastic sign that the #1 market cap has had its deserved spotlight, the sudden spike was indicative of many retail traders FOMO’ing in,”Notes Santiment “Wait for the euphoria to cool down some, and you’ll likely find another key entry point coming up.”
It now remains to be seen how social media sentiment would develop now that the price has declined and whether it would play a role in shaping Bitcoin’s next move.
BTC price
Bitcoin’s price has dropped by more than 3.5% over the past 24 hours. It is now back at $116.900.
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Source: www.newsbtc.com
