The decline in retail investor sentiment indicates a recovery in the cryptocurrency market.
Retail investor sentiment shows clear patterns driven by fear.
Every drop into the "fear zone" has been followed by a recovery.
Data from "Santiment" shows a reliable correlation.
Retail investor sentiment once again proves to be a strong indicator of movements in the cryptocurrency market. According to data from the blockchain analytics platform "Santiment," every time investor sentiment drops to what is known as the "fear zone," the market recovers shortly thereafter.
This psychological pattern among retail investors - who are typically non-professional traders - reveals a trend: when fear peaks, prices are often close to the bottom. The fear of the crowd seems to act as a contrarian indicator, aligning with the idea that markets tend to reverse when sentiment is at its extremes.
What does the "fear zone" really mean?
"Santiment" tracks social and trading data to assess how optimistic or pessimistic retail investors are. When the public shows overwhelming fear - characterized by negative social sentiment, panic selling, and weak engagement - it is classified as entering the "fear zone."
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