New Metrics Reveals Why Crypto Market Prices Swing Bullish or Bearish

According to data from Santiment, the relationship between social sentiment and crypto bullish and bearish price directions has been forming a new dynamic in October.

In a tweet, the crypto social sentiments analysis platform noted that swing trades during the month have been dictated by how often bullish and bearish calls are happening despite the long-term negative sentiment.

Notably, prices have been moving in the opposite direction to the crowd’s expectations during October. The price of Bitcoin (BTC), regarded as the benchmark cryptocurrency, has spiked when social platforms show too much bearish sentiment, while it has dropped when crowd sentiment has been highly bullish. 

Per Santiment’s data, the trend has so far been observed on several days, including Oct. 7 when bearish calls were followed by a bounce, and Oct. 8 and 11, when bullish calls on social platforms were succeeded by a price dip. 

Though the long-term crowd sentiment has remained negative, swing trades in October have been dictated by how often #bullish & #bearish calls are happening. When social platforms show too much bearish sentiment, prices bounce. When bullish, prices drop.

— Santiment (@santimentfeed) October 12, 2022

While Santiment gives no reason for the anomalous market trend, it leaves the possibility of Bitcoin staging a rally soon as sentiments have recently been largely bearish going by Bitcoin fear and greed index from, which is at present in extreme fear territory with a reading of 20. 

Could the crypto market be decoupling from other markets?

The reversed role social sentiment is playing in crypto price movement is not the only established trend the crypto market is defying. Santiment recently noted that the Bitcoin (BTC) and altcoin market bucked the trend of plunging when bearish inflation data is announced. 

Per Santiment’s tweet, the crypto market surged on the back of CPI data announcement leading to massive liquidations of short traders who were anticipating a price dip. 

Meanwhile, the crypto market’s behavior is coming amid analysts projecting that the nascent industry will soon decouple from the stock market. Speaking in an interview with CNBC, the founder of Skybridge Capital Anthony Scaramucci stated that crypto would decouple when there is regulatory clarity. 

“At some point, I do predict you’ll have a decoupling, but it won’t be until you get regulatory clarity so with the market up right now it’s not surprising to me that things like Bitcoin, Avalanche, and Solana are moving,” he said. 

Similarly, a recent research report by Kaiko, a crypto research group, pointed out that BTC has reached its highest-ever correlation with gold.

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