Bitcoin has been showing positive signs since the beginning of 2019, and institutions are gearing up to cash in on the coin, regardless of a dump in prices. The Bitcoin ecosystem saw quite a few developments recently, including the creation of a liquid index by Nasdaq, and Bakkt’s partnership with Starbucks.
Even with all these developments, Bitcoin’s price seems to be facing major resistance at $4,000. However, data from The Tie regarding market sentiment and market cap suggested an interesting correlation.
During its all-time high, the price of Bitcoin was led by sentiment, which can be clearly seen in the chart above. In December 2017, its price shot up while the sentiment was negative; the price followed the sentiment and it crashed.
Since 2017, the price has closely followed the sentiment; the rising sentiment for Bitcoin has started to decline. However, the sentiment has changed from a negative stance to a positive one, between January and February.
Further, the 30-day average of Bitcoin’s market cap also exhibited an increase from -0.05 to +0.29. However, for the price of Bitcoin to rise and breach the $4,000 point, the sentiment must also increase. Contrarily, if sentiment falls, Bitcoin’s price will decline.
The Tie tweeted,
“If average daily sentiment score remains at its current level or increases price growth is expected, if it continues to drop we anticipate price reverting a bit. Despite Bitcoin experiencing resistance around $4K it appears that traders are still growing increasingly positive”
The seven-day chart of Price vs Sentiment vs Tweet volume can be seen below. It suggests that market sentiment is increasing, even as the price remains constant.
The tweet volume saw a downtrend on March 11, 2019, but it has since caught up to its original level. This means that Bitcoin is in a safe place for now.
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