If you are aware of the crypto market, you might know that it is highly volatile and is prone to massive fluctuations. And these fluctuations are caused by several factors which include the press, public opinion, and social media.
This can also be termed as a collective attitude of investors and traders towards the crypto market. An analysis of this collective attitude is known as market sentiment. Let’s take a look at crypto market sentiment, its importance, and how to conduct a market sentiment.
Crypto Market Sentiment: What is it?
As mentioned above, a collective sentiment of investors and traders towards a market asset is considered as market sentiment. And just like the stock market, the concept of market sentiment also exists in the crypto market.
Market sentiment is known to drive the market either in the positive direction or negative. A small tweet from a renowned personality such as Elon Musk can turn the overall market sentiment in favor or against it. For example, Dogecoin was really hyped during the bull period, and it was because of social media. Several people were talking about Dogecoin and how it will be the best crypto coin in the future.
Remember the tweet from Elon Musk saying that Dogecoin is people’s crypto? This tweet alone boosted the market sentiment in favor of Dogecoin.
Crypto Market Sentiment: Why is it important?
Market sentiment analysis is important to make an informed decision. Sentiment analysis is as important as fundamental or technical analysis of the market. This helps you make an informed decision and helps you invest better. Here’s how crypto market sentiment analysis can help:
- Identify profitable trends in the market
- Determine the short term and mid-term price action for different coins
- Differentiate between actual FOMO trends and herd mentality
- Take control of your emotional state during trading
Crypto Market Sentiment Analysis: How to perform?
To perform market sentiment analysis, you need to gather a lot of information using sophisticated tools. However, if you don’t know how to operate these sophisticated tools, don’t worry, you can always look at social trends. This is what you can do:
- Social mentions tracking using data collection tools. You will find several data collection tools online.
- You can read blogs, news, and media articles on top websites such as CoinDesk, Binance Academy, and on our website at Coin Informer.
- Crypto investors also track major transactions made by crypto whales. These transactions have been observed to make a major impact on market sentiment. Twitter and Telegram offer a few free whale bots to track these whales.
- Use Google Trends to track the hype around the market. For example, if you find that a large volume of searches is made on how to buy crypto, you know the overall sentiment is positive.
Crypto market sentiments are crucial to determine the price trends and profitable opportunities. Hence, if you want to make a lucrative investment in the crypto market, you must keep a tab on market sentiments.
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