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- XRP fear levels reached zones previously linked with strong market rebounds.
- Santiment data showed bearish XRP sentiment nearing critical historical reversal territory.
- XRP traders turned cautious again as social sentiment weakened across platforms.
Data from blockchain analytics firm Santiment suggests that XRP social sentiment is in a rare bearish range that historically correlates with a number of price rebounds. The reading of the market is overall bearish, as the number of comments from traders on the bearish side almost equaled the bulls’ comments on the major social media websites.
XRP’s bullbear ratio of positive to negative sentiment fell to 1.1 bullish comments per bearish comment, according to Santiment. This was one of the lowest sentiment readings for XRP in the past two nearly three weeks, the analytics firm said. The drop was even though XRP saw relatively stable trading volumes in recent market sessions. Further, Santiment’s chart revealed that XRP was sliding further towards the “FUD zone”, which the firm defined as the space in which fear and uncertainty hold sway among traders and conversations on the internet.
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Santiment Data Shows Fear Returning Across XRP
Santiment says that past rallies to this fear state have been typically followed by short-term XRP rebounds. The analytics platform said that sometimes too pessimistic is not a bad thing as weaker players tend to get out of the game sooner in periods of uncertainty. As a result, it may start to slow down the selling momentum once the panic activity has subsided in the market. Santiment also noted that it can form contrarian setups when traders get too invested in one direction.
Moreover, as shown in the chart below, there were a few earlier points during May where XRP’s sentiment was comparable. In several of those instances, XRP’s price subsequently stabilized or bounced up moderately. So too, the analytics firm noted, did the opposite when things were too rosy. XRP has been in the “FOMO zone” in the past, where the bulls dominated the bear discussions, Santiment noted.
What does it imply for XRP price
While trading with social data indicators is important, Santiment advised traders to use them alongside other market indicators. While a fear environment has historically been conducive to rebounds, long-term crypto market sentiment will still have a greater influence on XRP price action. During the last sentiment drop, XRP maintained its level of active trading. In addition, market activity was relatively stable, indicating that investors were keen to see if the previous recovery cycle could resume.
Santiment noted that the overall sentiment structure is currently fear-based, similar to a few times in the past where XRP had seen temporary rallies. Short-term traders are now closely watching to see if social sentiment is once again weakening, thus creating market conditions for price stabilization.
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