Bitcoin user sentiment reaches multi-month high as BTC price hits $21,000

Divya Khurana

19 January 2023 04:39

3 min reading

Due to the January BTC price rise, the market has experienced the most significant investor optimism since July.

The bullish market sentiment, backed by the price recovery, has caused several analysts to think that the Bitcoin price has reached its bottom.

Bitcoin reached a four-month high above $21,000 in the third week of January, boosting traders' optimism. Due to the January BTC price rise, the market has experienced the most significant investor optimism since July.

Santiment, a crypto analytics firm, reports that the optimistic attitude among traders has reached its second-highest level in the previous 14 months and has reached its highest level in six months. According to the data, traders are viewing Bitcoin's price recovery as an indication of a possible larger breakout in the near term.

The term "crowd/investor sentiment" refers to the general opinion of investors about a given asset or financial market. It describes the psychology of a market's participants as indicated by activity and shifts in the price of the asset that is traded there.

The graph above indicates three significant peaks in investor sentiment since 2021. In November 2021, there was the first marked increase in sentiment, which was followed by a rise in the price of bitcoin to a record-breaking high of $68,789. In July 2022, a slight price increase was followed by the second significant jump, which occurred despite United States Federal Reserve hints about potential inflation relief. Even though the price increase following the increase in crowd sentiment in July 2022 was not significant due to marketwide bearish sentiment, traders did buy the dip around $19,000.

The most recent surge in crowd sentiment happened after a long winter in 2022. According to analysts, the BTC price recovery could indicate a market bottom. The periods from bottom to top and top to bottom have stayed steady since 2015 at 152 weeks and 52 weeks, respectively, as shown by independent market analyst HornHairs.

If you look at the long-term price behavior of Bitcoin, the lead-up to the top and bottom of the past cycles look very similar. The cycle from 2020 to 2021 seems to be following a similar pattern, which is even more intriguing.