Bitcoin and Ethereum: On-chain outlook, Edition #8 (22/06/21)

Negative social sentiment spikes as BTC briefly touched 29k. Coincidence? Let’s explore the historical relationship between sentiment and price

For today’s on-chain edition, we wanted to explore social sentiment as a tool for helping you execute trades.

While it is not perfect, this indicator could be useful for traders who are looking to do a short-term trade (scalp trade) when combined with other technical indicators.

The recent visit of 29k for BTC was met with an extreme spike in negative social sentiment (see the purple circle in the graph below). The price then rebounded, with Bitcoin now sitting within the 33-34k range.

While it is no indicator of a trend reversal, this tool would be useful for traders looking to scalp long the dip and take profit shortly after. When reviewing instances when negative sentiment have spiked since April, we can see that there are a few cases (see red circles).

This tracker aggregates sentiment across three mediums: Twitter, Telegram & Reddit. The score often ranges between 100 and 400. We would classify a score above 550 as being extreme and a useful indicator for traders. If you would like to have quicker updates on when the score is above 550, feel free to let us know in the comments.

Let’s also follow up on how Bitcoin & Ethereum holders have fared during this dip.

Bitcoin:

The number of wallets holding 1k to 100k BTC has slightly increased. While this is not a major change nor can Bulls get too excited, it is still good to see this group not drop off this during the dip.

Ethereum:

ETH also paints a similar story to BTC with the number of holders also slight increasing throughout the dip.

As always, trade safe and responsibly. Stay tuned for the next update!

- q

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