Social mentions about bitcoin have touched an all-time low on Twitter. Also, BTC deposits on major cryptocurrency exchanges are dropping steadily and are at their lowest levels since November 2018. Will these two developments push bitcoin prices higher in the near term?
Bitcoin’s Social Sentiment On Twitter At An All-time Low
As per crypto market metrics and insights provider Santiment, Twitter mentions of the world’s top cryptocurrency has reached new lows since 2018. Even though BTC rallied to $11,000 again after September 3rd, Santiment‘s ‘Weighted Social Sentiment’ indicator for BTC hit the lowest value of -0.8 on the 2-year chart.
Santiment commented that unusually low levels of social mentions about Bitcoin on Twitter correspond to BTC price rallies. In contrast, when people talk a lot about the cryptocurrency, it trims all previously accrued gains.
To work out the sentiment score, Santiment folks and researchers designed a machine-learning model based on a curated set of 1.6 million tweets. Sentiment in these social conversations falls under positive and negative. According to the official website that describes the entire process in detail:
This model is then used to evaluate the sentiment of each single document in the Social Data set, i.e. it assigns a positive and negative sentiment score to each message/post/comment/etc. These scores are probabilities that the content of the text being analyzed is positive or negative respectively. Therefore both the positive and negative sentiment scores fall in a range between 0 (not positive/negative at all) and 1 (extremely positive/negative). Moreover, the sum of these two scores always equals 1.
BTC Deposits On Cryptocurrency Exchanges Is Consistently Dropping
Cryptocurrency analysis firm, Arcane Research, has dropped another market observation which points out that bitcoin deposits on crypto exchanges are gradually declining. The numbers are at their lowest since November 2018. During the 6-month timeframe from March 15th to September 16th, there has been a net outflow of 365,781 BTC from different exchanges.
The outlet concluded that the above trend would drive down the selling pressure on Bitcoin as investors will just hold on to their BTC funds, with only a few of them liquidating to realize profits.
Do these readings on these two macro indicators mean that bitcoin is primed for a rally? It seems so.
Bitcoin Flashes Major Buy Signal Since Black Thursday Crash
Santiment’s observations regarding dropping social media mentions and Arcane Research’s insights on dropping BTC deposits from cryptocurrency exchanges does hint at an impending rally for Bitcoin. Also, the GTI Global Strength Indicator posits that BTC is poised for a breakout in the immediate future.
According to the technical indicator, Bitcoin has flashed its first major buy signal since the Black Thursday crash. BTC’s bullish outlook looks strong also because of the asset’s ‘healthy-looking’ on-chain indicators, as pointed out by CryptoQuant.
— CryptoQuant (@cryptoquant_com) September 16, 2020
Will bitcoin surpass the $12,000 level and rally up higher riding on the above strong fundamentals? That remains to be seen.