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An analyst: A surge in bullish market sentiment could be a sign that Bitcoin’s price is bottoming out

یک تحلیلگر: جهش احساسات صعودی بازار می‌تواند نشانه‌ای رسیدن قیمت بیت کوین به کف باشد

With Bitcoin rising to its highest level in the last four months, the price of more than $21,000 in the third week of January (4th week of December), traders’ hopes for the start of a new trend increased once again. In fact, a review of the data shows that after the current price jump, the market has experienced the highest level of optimism among investors since July of last year.

To the report According to data from cryptocurrency analytics firm Sentiment, traders’ collective sentiment reached its highest level in six months and the second highest level of bullish sentiment in 14 months, according to Cointelegraph. This data suggests that traders are treating the price jump in Bitcoin as a signal of a possible bigger breakout in the near future.

Read more: What is sentiment analysis and how is it done?

The term “collective/investor sentiment” describes how investors generally feel about a particular asset or financial market. This term refers to the prevailing atmosphere of the market or the psychological characteristics of its participants, which is expressed by the activity and price changes of the asset traded in that market.

An analyst: A surge in bullish market sentiment could be a sign that Bitcoin's price is bottoming out
Weighted Sentiment Chart of Bitcoin Investors

The chart above shows the three major jumps in investor sentiment since 2021. The first major jump in sentiment occurred in November 2021 (Aban 1400), following which the price of Bitcoin reached an all-time high of $68,789.

The second big jump came in July 2022 (July 1401) following a slight price increase amid the Federal Reserve’s hint of a possible reduction in inflation. In fact, the increase in price after the jump in collective sentiment in July 2022 (July 1401) was not very significant; Because the transaction, due to the spread of bearish sentiments in the market, they bought Bitcoin at the bottom of $19,000 and sold it at a higher price.

The latest spike in trader sentiment came after the market endured a long winter in 2022. Analysts believe that the recent increase in the price of Bitcoin could be a sign of a market bottom. According to HornHairs, an independent market analyst, since 2015, the time interval between the price reaching the market floor and the ceiling has been 152 weeks and from the ceiling to the market floor has been 52 weeks.

An analyst: A surge in bullish market sentiment could be a sign that Bitcoin's price is bottoming out

This analyst wrote on his Twitter in explaining the chart above:

The bull market from 2015 to 2017 lasted 1,064 days.

The bear market from 2017 to 2018 lasted 364 days.

The bull market from 2018 to 2021 lasted 1,064 days.

The bear market of 2021 has lasted 364 days so far.

Based on the time period of the past cycles, there are 1001 days left until the peak of the market.

When examining the long-term behavior of Bitcoin’s price, we notice that past bull and bear cycles are surprisingly similar to each other. More interestingly, the next cycle seems likely to follow a similar pattern.

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