Why Is It Important to Understand Crypto Market Sentiment?

Market sentiment is an evaluation of the attitude and emotions of traders regarding a particular asset or investment. Whereas technical and fundamental analysis takes a structured approach to understand price behavior, sentiment analysis aims to understand how individual perspectives impact the market price. Perspectives do not necessarily reflect measurable metrics but instead convey the shared feeling of a group.

Performing market sentiment analysis requires researching social channels, industry news, transaction alerts, and reading sentiment indicators to gauge current or forthcoming market movements. Unlike in conventional stock or Forex markets with significant institutional involvement, cryptocurrency market sentiment analysis grants more insight due to the social nature of the industry. After all, a single tweet or road map update has been known to send a coin to the moon or bring markets crashing down.

We’ll show you how to measure market sentiment with major indicators and use it as part of your trading strategy. Just as with fundamental and technical analysis, it cannot be overlooked. 

What Is Crypto Sentiment?

The term “sentiment” in the finance context is a view or an opinion expressed about the condition of a market. Crypto market sentiment describes the general emotional opinions and attitudes of investors toward the asset. It conveys the crowd psychology of those involved in the trading and development of the cryptocurrency as reflected through social and trading metrics.