Cryptocurrencies are a new and exciting investment option, but they can be volatile and difficult to trade. In the world of cryptocurrency, fear and greed often drive the prices up and down. Crypto sentiment trading tools that analyze sentiment can give you an edge in this market. These tools can help you stay informed about how sentiment is changing in the market, so that you can make more informed decisions about when to buy and sell.
As Warren Buffet once said in a 2004 investors letter to his shareholders, “be fearful when others are greedy and greedy only when others are fearful.” The fear of the unknown is enough to make any investor sweat.
Extreme fear could mean investors are too worried. But for those who are able, it might just be a life changing buying opportunity. Greed, however, never feels good when it turns up in your portfolio. When investors are getting too greedy, that means the market is due for a correction and this could be an opportunity to sell some shares before they plummet.
Here are some of the best sentiment trading tools available to traders in 2022.
LunarCrush is a social listening platform with real time in depth data and global metrics who has the goal of becoming the Bloomberg of crypto. Their Galaxy Score utilizes artificial intelligence and machine learning to analyze information from dozens of sources, providing you with valuable insights that can be used in your cryptocurrency investments. Their Galaxy Score is determined by a mix of the price score, average sentiment score, social impact score and correlation rank.
Unlike the Crypto Fear and Greed Index and the Bitcoin Bull and Bear Index, LunarCrush analyzes more than just bitcoin. Users of LunarCrush can create their own portfolio and set custom alerts for their favorite altcoins, such as, price change, trading volume, social volume and social score. Not only can you connect your Twitter account to provide a more customized dashboard, LunarCrush tracks the top influencers of your favorite coins.
LunarCrush is powered by the LUNR token and they have gamified the LunarCrush experience. Points are awarded by activities on the platform, such as, signing up, personalizing your feed, setting alerts, daily activities, link sharing and referrals. Users can even earn bonus rewards by holding a certain amount of the LUNR token. LunarCrush offers free and paid versions.
Santiment is a real time on-chain analytics and crypto social media analysis tool that analyzes crypto sentiment from Twitter, Reddit and even Telegram. Crypto market sentiment is tracked by social media activity of cryptocurrencies, coin movement in and out of significant wallets and the prediction of top and bottom market cycles.
Both Machine Effort and Human Intuition are analyzed simultaneously to predict market behavior on the Santiment platform. Machine efforts tracked are price and volume data, development activity data, on-chain data, holder behavior activity, social media activity, crowd sentiment data. Human intuition tracked are research reports, network audits, price/trend analysis, trading strategies, and sentiment analysis.
Santiment is backed by their own token SAN. SAN may be used for monthly subscriptions, rewards and staking. Payment in SAN is the only way to access certain premium feeds. Santiment offers free and paid versions.
3. Crypto Fear & Greed Index
The volatility of the crypto market can be very emotional. Fear Uncertainty Doubt (FUD) and Fear of Missing Out (FOMO) may cause irrational overreactions in crypto trading. Alternative.me’s Crypto Fear and Greed Index tries to reduce emotional trades in Crypto.
The Crypto Fear & Greed Index analyzes the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means “Extreme Fear”, while 100 means “Extreme Greed.” Currently this crypto sentiment index only measures data for bitcoin.
Data points on volatility, market momentum, social media, bitcoin dominance and google search trends of bitcoin are all collected and measured to create the The Crypto Fear and Greed Index score.
4. Bitcoin Sentiment- Bull and Bear Index
With the Augmento Bitcoin Sentiment Bull and Bear Index, you can get a quantitative forecast of the sentiment surrounding online cryptocurrency communication data. The Bull and Bear Index compares 93 sentiments and topics on social media platforms Twitter, Reddit and Bitcointalk to predict a bullish or bullish.
Powered by AI this crypto sentiment index shows scores between 0 and 1. 0 is an extremely bearish market and 1 is an extremely bullish market.
By hovering over any of the numbers in the Bull and Bear Index graph you are able to see what topics were trending at that time. You may also click on their legend for more details about each data source.
Augmento continuously trains its algorithm to become more sophisticated at understanding the complex communications of online crypto narratives. The Bull and Bear Index is updated every hour.
Add a Sentiment Tool to Your Trading Kit
In the crypto market, there are many opportunities to succeed. One such opportunity is with crypto sentiment trading tools that use AI and machine learning to predict how a coin will perform in the future based on what people say about it online.
If you have been paying attention to the news in recent months, it may seem like cryptocurrencies are on a rollercoaster. It is true that they can be volatile and unpredictable, but with the right tools, cryptocurrency trading does not have to be intimidating or as risky.
You can take control of your emotions when investing by understanding how market sentiment works—the emotional highs and lows of crypto traders during periods of volatility.