Sentiment Data Suggest Downside for Bitcoin, Ether, Litecoin and Ripple
Market sentiment talking points:
- From a contrarian perspective, that suggests the price risk is to the downside.
- In this webinar I took a look at the major cryptocurrencies as well as sentiment in other financial markets.
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Downside possible for Bitcoin, Ripple, Ether and Litecoin
Sentiment data show retail traders heavily long the major cryptocurrencies and from a contrarian viewpoint that suggests their prices could fall back. Here, for example, is Bitcoin.
Bitcoin Price Chart, Daily Timeframe (December 13, 2017 – May 13, 2018)
Bitcoin sentiment chart
Retail trader data show 74.5% of traders are net-long Bitcoin, with the ratio of traders long to short at 2.92 to 1. The number of traders net-long is 0.6% lower than yesterday and 4.7% higher from last week, while the number of traders net-short is 2.1% lower than yesterday and 16.2% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Bitcoin-bearish contrarian trading bias.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.