Social Media Sentiment Signal calling intermediate bottom for Bitcoin at 3700 USD

BittsAnalytics provides its users with real-time social media sentiment, calculated with machine learning from social media texts about individual cryptocurrencies. Social media sentiment has proved as a very valuable signal many times in the past and again in recent downturn, effectively signalling intermediate bottom at 3700 USD.

There were several days of severe negative social media sentiment for Bitcoin during recent correction, as evident from this picture, showing daily social media sentiment for Bitcoin:

Similar picture was seen for social media sentiment on hourly level.

After the first surge on October 22nd the price remained first flat and then fell after retreat in sentiment. Yesterday however came a second even stronger sentiment surge when Bitcoin was at around 3700 USD and this sentiment surged to new intermediate heights. Unlike previous surge, the positive sentiment trend persisted this time and Bitcoin price also followed afterwards.

Social media sentiment was thus again proven very valuable as a market sentiment indicator. It is available as part of our Advanced subscription, more information is available at:

https://www.bittsanalytics.com/subscribe.php

Social Media Sentiment also flashed warnings with Bitcoin at 6500 USD, you can read more in our previous blog:

Warning from our market sentiment indicator was again correct – flashing warnings with Bitcoin at 6500 USD

Warning from our market sentiment indicator was again correct – flashing warnings with Bitcoin at 6500 USD

In the beginning of 2018 we have introduced a market timing indicator based on social media sentiment of cryptocurrencies, where the sentiment is determined with machine learning from texts of social media posts.

For more detail and some of past warnings see e.g. our blog post from March of 2018:

Our warning Sentiment Market Indicator was now correct for the fourth time in a row

The market timing indicator was again correct recently, in flashing warnings before the latest fall in cryptocurrency prices. As you can see in the picture below:

it actually gave two warning signals in a short period of time. In a way the latest warnings were even more worrisome. The market indicator gives a warning when all among the top 10 cryptocurrencies in terms of market cap have a positive daily change in sentiment. In a sense it measures short-term excess optimism. But unlike most of previous cases this time was no major price jump before the warnings. In other words, despite a lot of excess optimism about bitcoin and sector in general (due to positive news on Bakkt and many others), there was almost no price change. If the price does not move on such optimism then it is likely that the upside is limited and downside can be large on potential negative impact news.

This is indeed what happened subsequently after the warning signals, a sharp drop in bitcoin and other crypto prices:

Our market sentiment indicator is part of our subscriptions, learn more about it at:

https://www.bittsanalytics.com/subscribe.php

Alpha Generating Signals from Blockchain Analysis of Bitcoin Cash

Our platform BittsAnalytics has recently introduced another advanced feature for analysis of cryptocurrencies – Blockchain Analytics. For main cryptocurrencies, such as Bitcoin, Bitcoin Cash, Ethereum and main ERC-20 based tokens we are analyzing the changes in holdings of top token holders. Our research has shown that such changes can have a high impact on prices and this led us to include blockchain analysis to the selection of our cutting edge tools for investors in digital assets.

In this blog post we would like to show you an example of impact of changes in top token holdings onĀ  subsequent price developments. As the Bitcoin Cash has dominated the recent news with its hard fork, we decided to focus on this particular cryptocurrency.

Over the summer there were several examples of large reduction among the top 10 non-exchange token holders. Often this means that the holdings are moved to exchanges and will be soon sold, resulting in selling pressure. For example, on 21st June 2018, there was a large reduction in holdings of one of the largest addresses at the time:

In seven days immediately after the aforementioned balance reduction, the Bitcoin Cash price collapsed from 874 USD to 660 USD for a negative return of -25%. In the same period Bitcoin lost less than 2%, leading to +23% of alpha for the trade based on this blockchain analysis.

If you are interested in using blockchain analytics for generating alpha in your digital assets trading please contact us at [email protected]

An example screenshot from the platform showing evolution of top 20 holders for Bitcoin with exchanges separately denoted: