Crowd Sentiment Coming Back Down to Earth For Top Caps? Let's Explore!

When analyzing the mood of the crypto community across your X timelines, it may appear as though everyone is pretty bullish on crypto following the historic 2.5 month bullish stretch of market cap rises dating back to early September. But don't be deceived by the mostly "up only" crowd narrative that still seems to be apparent. Social media is designed to add visibility to posts people like, and bury those that go against most traders' hopes and wishes (even when they are valid theories).

As Bitcoin has (for now) just barely missed out on reaching the historic $100,000 market value milestone, traders have quickly turned elsewhere as small cap altcoins have grabbed their attention instead. Many new traders have jumped in during Q4, and they are quite spoiled by the constant bullish momentum of the crypto markets.

So when Bitcoin began to flatten out a week after Donald Trump was elected as the 47th President of the United States, the mood on social media dropped quite a bit. Once the bullish euphoria died down, that's when BTC made its bee line to $99.8K, where it then began ranging again. Now that the ranging stretch has established itself again for a few days, we are back to seeing quite a bit of negativity.

This chart below reveals Bitcoin's total social media positive sentiment comments divided by negative sentiment comments. And as an added factor, we multiply the percentage of discussions being had about BTC (also known as its social dominance):

In short, when this metric gets very high, it's an indication that there is a ton of euphoria and FOMO related to the coin. Typically, with the exception of the massive Donald Trump FOMO spike on November 5th, high spikes will usually foreshadow that a price drop is about to happen. On the other hand, low dips indicate a great deal of trader FUD and usually foreshadow that a price rise is about to happen.

As we can see, despite the huge rise in price in previous weeks, the pink area indicates we are actually seeing our third lowest dip of the past 6 months right now. This reveals that a very large amount of traders believe that Bitcoin's failure to capture a $100K market cap is a signal that markets are about to get flushed downward.

But it's not just Bitcoin as the sole top cap seeing a negative perception by the crowd at the moment. Ethereum was one of the big under-performers following the US election. And we can see below that the sentiment really dropped off in a big way around November 12th. It did rally to above $3,300 this past week, but it hasn't been enough to reignite traders' interests in the #2 market cap.

Solana has been one of the best price performers throughout this Q4 rally, cracking an all-time high above $264 in recent days. However, we can see that even its sentiment has dropped considerably over the past 24 hours, suddenly sitting at its most negative crowd sentiment we've seen over the past 3 months:

And when checking out XRP, despite its massive rally over $1.60 for the first time in well over three years, the sentiment indicates traders simply aren't believing this rally can continue. In fact, in this asset's case, the yellow area chart has actually fallen below the 0-axis, indicating there are more negative comments across social media being picked up by Santiment's data than there are positive comments:

So what's going on here? Why is the week of Thanksgiving kicking off with so much doom and gloom? Well, it's not like the entire crypto sector is seeing the same level of sudden scoffing that the top caps are seeing. Maybe we should check out the top performers over the past week among large and mid caps:

According to Santiment's data screener, Stellar (XLM) is +116% in market cap and +289% in social volume this past week (compared to the prior week). Polkadot (+57%) and Celestia (+52%) are also seeing huge surges. When we chart out the social dominance of these three assets together, we can see how they are clearly taking away some shine and attention away from the top caps:

So in short, top caps appear to be getting "off of traders' radars" for the time being because they are simply paying attention to greener pastures at the moment. We have seen occasional dips in BTC and ETH sentiment throughout this rally when memecoin euphoria was peaking as well, so this is nothing new.

For now, the ideal circumstance is when nearly EVERYTHING in crypto is suddenly seeing bearish sentiments and narratives pouring in from the crowd. At the moment, this is more of a phase where traders are simply being distracted by the latest outperformers and then flocking to them.

Just remember that prices generally move the opposite direction of the crowd's expectations. So if Bitcoin continues to be overlooked for random pumping altcoins, the familiar pattern is for everything to get slightly flushed (especially the alts that are being FOMO'd), and then once the crowd deems the bull rally dead, it is the perfect time for BTC to go on a run and perhaps finally capture the six-figure market value you are anticipating!

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.