Social Media Sentiment Analysis

The easiest and most obvious easy to analyze sentiment, is to check out social media. This includes not only “crypto Twitter” but also r/cryptocurrency and other sub-Reddits, Facebook groups, Telegram, and more.

If the majority of chatter is increasingly bullish, chances are, trends are about to reverse. When sentiment is in the gutter, a rally may soon be coming.

Contrarian sentiment isn’t always the answer, however, many well-known investors made their wealth using such strategies. Warren Buffett is quoted as saying “Be fearful when others are greedy, be greedy when others are fearful,” in reference.

A tool exists that measures this type of fear and greed across the cryptocurrency market, called the Fear and Greed Index. Observing this tool carefully can help traders understand how sentiment influences price action.

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