What Is Crypto Market Sentiment And It's Importance

What is market sentiment?

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Market sentiment is the type of sentiment of all the traders collectively towards the crypto market and the main thing is it has a important role in influencing the crypto market cycle. But as we know crypto is volatile in nature so, this also always don't go as it feels sometimes market goes opposite of the sentiment and makes correction. Well, we can't consider it as a 100% correct thing but it is a part which can have power to affect the market as well within both directions, and it is linked with fundamental analysis as well.

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Why is market sentiment analysis important?

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Like we do fundamental analysis or technical analysis to get the best prediction we can add sentimental analysis with it as well to get more accurate prediction and to follow profitable trends.

Like sometimes fomo created due to collective mentality or better called herd mentality of users and it results in fake or short leaved pump which falls fast too, but if you do sentimental analysis you will realise if the fomo is real or just the result of a herd mentality. Well it helps with some other things as well like:-

• In giving idea about sort and mid term price action strategy.

• In the develop of better mind control helps you to trade from mind rather than trading by putting feelings.

How to perform market sentiment analysis?

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To get the sentiment of the people towards a crypto, you have to collect the data of their views and opinion on that crypto currency and to collect this data, social media can help us a lot like we can follow the official crypto page or discussion forums and telegram forums etc., where we can see announcements and conversion and discussion among users about the topic related to that crypto and it will help us to determine a basic thing that they are positive about the crypto currency or negative.

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But it is necessary to avoid unofficial and unpopular pages/accounts and their views while determining sentimental analysis. Except that we can follow few more things Which will help us in this analysis such as:-

• By following up latest news from good websites like Coindesk, Coin telegraph or from blog like Binance blog etc.

• By following whale movements, because whale movements have impact on the price and it also represent the type of intrest towards the crypto.

• By using Fear and Greed Index Indicator.