Have you ever woken up to see one of your crypto currencies in your portfolio has risen 30% while the others haven’t moved at all? There is a reason for this, some news event has changed that cryptocurrencies sentiment which in turn has caused more demand for it.
It is important to perform sentiment analysis on this crypto to understand what news has caused this spike or dip in price. Has the news caused a hard sentiment change which could potentially alter the fundamental outlook of this coin? or is it soft sentiment which the hype around it will die off over the next few days or even hours?
All these factors play an important role in determining how you would trade to either bank profits or minimize more loss.
Performing localized sentiment analysis ties in with the fundamental analysis of that coin to large degree.
So what tools do we have to find out whats been happening with our coin?
Firstly lets use an example of PIVX. We noticed that it is up 36.19% on our exchange.
Using coinmarketcap.com, entering the crypto-coins name, we will be taken to its page, as shown below.
By clicking on the social table, we are shown both the coins Twitter feed and Reddit forum. Scrolling through the Twitter feed, there is nothing in particular which could have caused this spike. But if we read the reddit summary (red), we can see some important news that PivX has been listed on Binance, a large crypto exchange. This has caused the price pump as a host of new people can now buy the token.
What if though, Twitter and Reddit didn’t give reason to this sudden spike or dip? Well then we have to move onto the next tools. If you click on the message board link (green), it will take you to the official forums for PivX where you can scan through the threads or even ask questions.
Another alternative is to go to the Telegram group of PivX. Telegram is a group chat used by many crypto currencies, its is a good way for specific crypto communities to get together and talk about the current news and future of their crypto currency. Usually you can find the Telegram link beneath the message board link as “chat” but in this example, it isn’t listed. So a simple Google search of “pivx telegram” has found it instead.
To use the Telegram you must download the app onto your computer or phone. Its free and easy. Once you have installed it you can click the link in Google and it should automatically open up telegram and ask you if you want to join the group.
It is very easy to get your answers from the telegram group because chances are there are about another few hundred people asking the same thing. Although it is sometimes fast paced, you can scroll through and look through the chat log for answer or simply ask the question as shown above in red. As you can see there is also important messages pinned in the telegram groups which may also help answer your questions as shown above in yellow.
Hopefully you have a basic understanding on how to analyse the sentiment of crypto currencies. With practice and knowledge you can use this to profits from trades and manage risk on your portfolio efficiently.
Note: This article defines the the sentiment of a specific coin as the localized sentiment as it really only effects this specific cryptocurrency not the market as a whole.
Hard sentiment is sentiment which could last multiple trading sessions (i.e days or weeks) sessions and could potentially change the overall fundamentals of a crypto currency.
Soft sentiment is sentiment which will last less than a trading session or a couple of days, and the impact of the news doesn’t change the greater fundamental outlook.
To learn how to apply some of your sentimental and fundamentally analysis skill and make some profits, take a look at the strategies page.