With more Bitcoin ETF decisions on the horizon, cryptocurrency traders are adopting new methods to forecast upcoming rallies–including trader Jacob Canfield, who has developed a Bitcoin indicator that uses CNBC tweets to predict prices.
CNBC Tweets Contradictory to Price Action
Canfield’s Bitcoin indicator displays a Bitcoin price chart labeled with bullish and bearish CNBC tweets, according to Trading View, a financial visualization platform and social network for traders and investors. Trading View also allows traders to backtest, forecast and strategize investment ideas.
In Canfield’s Bitcoin indicator, a barrage of bullish CNBC tweets released during peak prices show that the media outlet’s publicized sentiment may actually be contradictory to Bitcoin price action. At the top of the price chart, Canfield writes, “CNBC is the perfect contraindicator.”
?Average return on bearish tweets = 30%+ Profit.
?If the indicator holds up, we should see #BTC price rally to $8500+.
?Share away, but make sure you follow and tag me.
— I ❤️ Crypto (@ILOVECRYPT0) August 21, 2018
Testing his theory, Canfield set out to unveil the probable correlation between market sentiment and media coverage of cryptocurrency prices. In the description of his Bitcoin indicator, Canfield said:
“I’m sure that you’ve heard that CNBC is a good contraindicator, well I decided to put it to the test. … Almost every singletweet we’ve seen has been at the top of nearly every single rally, giving us a very strong sell signal. With every tweet we see, it has been a clear indicator of a short reversal and end of a rally.”
CNBC’s Fast Money frequently covers cryptocurrency price trends and news, often featuring market analysts and industry experts.
Fast Money contributor and BKCM CEO Brian Kelly is an active contributor to the show–acting as an influential figure in the cryptocurrency trading community.
Canfield continues to update the price chart with new CNBC tweets as they are released.
According to Canfield, recent bearish tweets by CNBC indicate a potential Bitcoin price rally:
“With everytweet, we typically see on average a 30 percent return. In the last week, we’ve seen three tweets from Twitter, which gives us a clear indication to go long here. Based on our 30 percent average returns, we should see a strong rally back to the $8,500 area, where we will then wait for more or tweets to let us know which way we are going.”
Confident in retail investors’ response to media influence, Canfield expressed optimism for the success of his Bitcoin indicator:
“I believe this is a perfect reflection of the emotions of average traders and investors, which is why it’s such an effective strategy.”
Whether Canfield’s theory will continue to prove accurate is yet to be determined. Traders are reminded to remain cautious during market drops and invest only what they can afford to lose.
Bitcoin, currently ranked #1 by market cap, is down 2.81% over the past 24 hours. BTC has a market cap of $110.53B with a 24 hour volume of $4.72B.
Cover Photo by Ricardo Gomez Angel on Unsplash