'Bullish' Comments on Reddit a Potential Bitcoin Signal

In the never-ending search for signals to give traders an edge, could bullish comments on Reddit serve as a momentum indicator for bitcoin? That's what a recent graphic by startup ChartStar suggests.

The data visualization company graphed comment data over the past several weeks for the term "Bullish" from several popular cryptocurrency Reddit channels, each with varying degrees of moderation.

Each comment entry was tallied only once; posting "Bullish bullish bullish" would count as just one comment.

Against the bullish mentions, ChartStar graphed the weekly close price of bitcoin.

Sure enough, positive comments seem to track nicely with bitcoin prices in the early weeks of 2020 - but up to a point.

After a sudden surge for the term "Bullish" on the seventh week of the year, bitcoin prices declined.

TradingView does support cryptocurrencies, but ChartStar's position is that cryptocurrency traders need new tools to execute winning strategies.

"There is a surge in optimism outpacing the trend, followed by a fall in price. This could indicate that excess optimism is a sign of the asset being overbought and is a potential warning a correction is due," said David Gilbert of ChartStar.

The jury is still out as to whether Reddit activity could act as a stochastic oscillator for bitcoin.

It could be that the bullish comments are posted after short-term rallies, not before.