Bitcoin is closer than ever to the $70,000 mark and investors are excited.
However, expectations sometimes outpace reality and the current level of “froth” in the market could be bad.
Matthew Hyland and Ki Young Ju warn that market sentiment is much more bullish than the actual sense.
Investors must be prepared for a possible sell-off before the real takeoff.
Bitcoin is inching closer to the $70,000 mark every second and traders are as excited as ever.
Investors have turned optimistic, with a growing number of bullish posts all over Twitter.
However not everyone is convinced that the greens have truly returned.
According to insights from independent crypto analyst Matthew Hyland, the ongoing sentiment in the market might not fully reflect the real state of things.
The ongoing surge in optimism could be misleading, and here’s why Hyland thinks so.
Bitcoin is currently ripping upwards according to CoinMarketCap, with a staggering 8% price increase on Bitcoin over the last week.
Bitcoin’s ongoing price increase
Returns data from Coinglass also shows that even though October is only halfway through, it is already mirroring September’s price increase.
Bitcoin monthly returns data
These moves of Bitcoin in "Uptober" have brought a wave of optimism to the market from both traders and influencers.
Traders like Michael van de Poppe have been vocal about Bitcoin’s “seemingly” bullish rounds.
Social sentiment has been bullish all through.
However Hyland warns that this surge in bullish sentiment might be exaggerated.
In an 18 October tweet, the analyst shared his thoughts on Twitter (X). According to Hyland, while Bitcoin’s price may truly have risen, the actual sentiment on the cryptocurrency isn’t all that bullish.
Hyland believes that the crypto market has become something of an “echo chamber.” In his opinion, traders and investors are easily convinced that traders and investors are easily convinced that the market is more bullish than it actually is.
This is because all they are exposed to is the bullish tone of conversations happening within the community.
“This place is an echo chamber, so it’s easy to be convinced sentiment is one way or the other,” Hyland stated.
He added that in the real sense, the real world isn’t paying that much attention to crypto as it did in the bull run of 2021.
In fact, according to insights from CryptoQuant founder Ki Young Ju:
Google search volumes for the word “Bitcoin” have also reached a one-year low as of mid-October 2024.
This shows that while the market itself is abuzz, it is something of an echo chamber where the bullish sentiment is bouncing off the walls and is being amplified.
According to Hyland, the number of players active in the market this year is drastically lower compared to 2021.
The analyst says that only around 10% of the participants from 2021 remain active today.
Moreso, current activity levels are only about 50% of what they were earlier this year.
For the market to see a true shift in sentiment, Hyland argues that retail investor interest needs to increase.
As of now, the broader public is standing at a distance and the strength of any real bullish momentum is bound to be weak.
As an addition, one indication of the current market sentiment is the Crypto Fear and Greed Index.
This index tracks emotions toward Bitcoin and the broader crypto market.
Interestingly as of October 12, the index moved from a neutral score of 49 to a “Greed” score of 72.
This shows a growing sense of optimism among market participants.
It also shows that profit-taking behavior from large investors is bound to start surging soon.
Historically, markets tend to move in the opposite direction of where investors expect.
In essence—when everyone is overly greedy, it might be time to be fearful.
This comes on the heels of recent warnings from Santiment in a separate tweet.
The analytics company warned traders who are expecting a new Bitcoin all-time high.
Temper expectations for Bitcoin
According to the platform, the crowd may need to temper its expectations. Santiment noted that the ratio of bullish versus bearish posts is currently 1.8 to 1.
This level of “froth” in the market might lead to a pullback if these expectations aren’t managed properly.
As if repeating the sentiment from Hyland, Santiment noted that “markets historically move in the opposite direction of the crowd’s expectations.”
At the end of the day, a cooling-off period may be necessary before Bitcoin achieves new highs.
While Bitcoin is currently inspiring optimism in the market, analysts are warning investors to be cautious.
The market may not be as bullish as it seems and retail investor interest is relatively low.
It is important to understand (as a trader or investor) that expectations sometimes outpace reality.
Remember to stay grounded and keep expectations in check as Bitcoin makes its way slowly but surely toward a new all-time high.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.