The data shows that bitcoin investors are showing high volume hype around a break above $30,000, which could end up backfiring.
Bitcoin investors are currently showing high levels of enthusiasm.
According to data from on-chain analytics firm VirtueThe enthusiasm in the market is currently much higher than that seen last month after breaking above the $25,000 level.
The indicator of interest here is “Social Volume”, which tells us about the degree of discussion occurring around a specific topic (such as bitcoin or the cryptocurrency market in general).
This metric measures this by counting the total number of social media text documents that mention a given keyword. Here social media text documents refer to the collection of data retrieved from social media websites such as Twitter, Reddit, and Telegram.
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One thing to note about the indicator is that it does not measure how many mentions of the term are occurring on social media, but rather how many text documents contain it at least once. For example, if a Reddit thread mentions “Bitcoin” five times, the post will still only contribute one unit to BTC’s social volume.
Now, here is a chart that shows the trend in social volume for the cryptocurrency market filtered specifically for terms related to bitcoin’s break above the $30,000 level:
The value of the metric seems to have been quite high over the past day | Source: Santiment on Twitter
As shown in the above graph, in order to get only social volume for discussions related to bitcoin price breakouts, these terms have been chosen by the analytics firm: $30k, 30k, $30,000, and 30,000.
It seems that during the last day the value of the indicator has seen a huge jump for these words. This clearly makes sense, as any sudden price movements such as those being seen now usually find assets under the spotlight, and such attention naturally leads to discussion on social media.
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However, the scale of the spike is still exceptionally large here and shows how excited investors are about this rally. In the chart, Sentiment has also displayed social volume for terms related to $25,000 to show how the current spike compares to the prior break of that level.
It is clearly visible that the social volume spike seen during the rally above $25,000 last month was much smaller than the one seen this time around. After that, the price continued to rise above the level for some time, but eventually hit a local top and dropped back down.
Such a high amount of hype is usually a sign that excitement is building among investors, which is something that has historically seen cryptocurrency pullbacks.
As the market may be euphoric yet again, it is possible that the coin may fall below the $30,000 mark. However, a pullback, if one occurs, need not last too long, as BTC was able to bounce back quickly from the $25,000 promotional top.
At the time of writing, bitcoin was trading around $30,100, up 7% over the past week.
Looks like the value of the asset has rapidly risen today | Source: BTCUSD on TradingView
Featured Image from Kanchanara on Unsplash.com, Charts from TradingView.com, Santiment.net