Bitcoin has seen a social dominance of 43.06%, which is a record. It has not been this high in over two years. This sharp increase comes after Bitcoin hit a record high of $123,100 on July 14’. However, it came back down 4.9% to $117,00, which saw it drop. Analysts report this rare social surge may be that of a turning point. This means retail FOMO may have run its course.
Santiment’s analyst Brian Quinlivan reported that a level of dominance has surpassed what is usual in quieter markets. Typically, we see ranges between 15-30%. What we are seeing is very atypical. In the past, such large spikes have been warning signs in the form of contrarian signals. This indicates too much social activity, which in market terms, is a precursor to short term price pullbacks.
Media Prevalence At Price Peaks
On June 11 and July 7, a social media spike was followed by a drop in price. This made it appear that the crowd was at its peak before the fall. While in general, social sentiment doesn’t do a good job of predicting Bitcoin prices (0.06). There is a much stronger correlation with tweet volume (0.8). This, in turn, makes social media dominance a better indicator.
Institutional action is what is playing it out. We saw Bitcoin ETFs report $2.21 billion in flow between July 10–11. This was headed by BlackRock’s IBIT. Professional money is still in but is at the stage of retail mania, which is almost euphoric. This presents an interesting split in terms of sentiment and strategy.
Bitcoin Social Dominance vs. Market Fundamentals
On chain data reports that Bitcoin has not seen a correction. At previous peaks, CryptoQuant’s realized cap data reports less speculative action. It also doesn’t have a “Peak Signal” which we had at past tops. Resistance is at $124,000 and $136,000. Conversely, key support is at $113,000 and $101,000.
Galaxy Digital’s Michael Harvey reports that we are in for consolidation. At the same time, he sees value in a further push higher should ETF inflows continue. Also out of Santiment says that for now we should wait for the euphoria to break. In the past, this has been the entry point for smart money.
Bitcoin Social Dominance Rotation To Altcoins?
As Bitcoin is in a down phase social sentiment may move to altcoins. On July 16 Ethereum saw a large jump in sentiment which included $4,000 price targets. This may mark the start of altcoin season which in turn will see retail interest divide among the various altcoins.
