London, UK – 04/22/2021: Bitcoin coins cryptocurrency on financial data chart background.
Data shows that bitcoin investors showed signs of fearful sentiment as the cryptocurrency’s price fell below $27,000.
Bitcoin’s rise in social dominance indicates fear in the market
According to on-chain analytics firm Santiment, BTC’s social dominance has increased recently. “Bitcoin social dominance” is an indicator that measures the percentage of total discussions about the top 100 assets by market cap that mention BTC.
This metric tells us how current investor interest in BTC compares to that in altcoins. Historically, high interest in altcoins (meaning BTC’s social dominance is low) has been a sign of greed in the market.
Typically, the more biased sentiment is in a particular direction, the greater the likelihood that markets will go against general market sentiment. Therefore, in times of greed, price corrections may become more likely.
However, if BTC’s societal dominance is high, it is a sign that interest in BTC is high at the moment. Such market conditions can be associated with the presence of fear, making a recovery naturally more likely.
Here is a chart showing Bitcoin’s social dominance trend over the past few months:
The value of the metric seems to have been high for the past few days | Source: Santiment on Twitter
In the chart above, Santiment has flipped the social dominance scale and placed the 20% mark at the “0” mark. According to the analytics firm, this 20 percent mark serves as a sort of “health line” for the cryptocurrency, meaning it is the threshold below which altcoins receive a dangerous level of attention.
The chart shows that social dominance was negative (ie, below that 20% health line) for the first few months of the rally, which then culminated in the price observing a plunge below $20,000.
However, after the price recovered from those lows, Bitcoin’s societal dominance shot into positive territory. Since then the metric has been within this zone.
Recently, the indicator has been pretty close to falling back into the greed zone as shown in the chart. However, discussions over BTC have regained momentum as the cryptocurrency’s price has faced further difficulties and has fallen below the $27,000 mark.
The timing of this surge likely suggests that the current heated debates are rooted in fear brewing among investors. It is currently unclear how the market will continue from here, but the rising fear at least implies that there is a greater likelihood of a local bottom being spotted soon, after which a rebound could take place.
BTC price
At the time of writing, Bitcoin is trading around $26,900, up 2% over the past week.
It looks like the value of BTC has fallen below the $27,000 mark | Source: BTCUSD on TradingView
Selected image from iStock.com, charts from TradingView.com, Santiment.net
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