Where’s the hype? Bitcoin sentiment lags despite bull run

Since collapsing below $4,000 in March 2020, Bitcoin (BTC) has been riding a bullish trend, surpassing the all-time high set in 2017 to recently touch $42,000.

During this period, however, Bitcoin-related Twitter activity has seen worse results than price.

Information provided by The TIE indicates that since 2019, Bitcoin Up software price has been above the Hype-To-Activity Ratio, a metric that looks at the number of tweets and the asset’s trading volume.

„The Hype-To-Activity Ratio measures the number of tweets related to a particular cryptocurrency per million dollars in trading volume,“ The TIE’s CEO Joshua Frank explained to Cointelegraph. According to a study published in August 2019, the average Hype-To-Activity Ratio across the industry equates to 1.02.

For much of 2018, Twitter hype significantly outpaced the price of Bitcoin, and then gradually declined until it briefly crossed the price in May 2019.

Twitter hype continued its decline, falling below the price in the second half of May: it has remained in this region ever since. Even on January 8, 2020, during Bitcoin’s recent spike, the digital asset posted a Hype-To-Activity score of just 1.24, slightly above industry averages.

However, mainstream media coverage skyrocketed after October 2020. When Bitcoin’s price rises dramatically, the asset attracts the attention of the general public, as observed during the 2017 rally toward $20,000. Since October, Bitcoin has charted a sizable rise, predictably capturing media attention.

Several large mainstream entities, such as MicroStrategy and Square, began announcing purchases of Bitcoin in 2020, influencing the sector. „Bitcoin’s rally was clearly driven by institutional investors,“ Frank explained to Cointelegraph on Monday, adding:

„When Bitcoin surpassed $20,000 in December, the 30-day average of Bitcoin Tweet volume was only half of the 2017/2018 highs. The dearth of Twitter conversations suggests that those who initially bought were actually a small number of large investors, not a large number of small investors.“

Combining the number of tweets with the market cap, The TIE’s NVTweet Ratio data describes a trend driven primarily by large traders. Recent data, however, suggests greater retail participation, in part reflected in Twitter conversations about BTC.

Bitcoin’s record-breaking mentions on Twitter came around the same time as the crypto asset’s recent correction, Frank added:

„In general, we have found that extremely high sentiment combined with excessive activity on Twitter tends to be a negative signal for Bitcoin’s price in the short to medium term. Bitcoin’s long-term sentiment (a measure of how positive conversations have been over the past 50 days compared to the previous 200) is near an all-time high.“

Recently, Bitcoin’s price plummeted about 28% from its high, but has since recovered some of the lost ground.