January 30, 2025
Keep Up with the Crypto Joneses
Dear Subscriber,
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| By Jurica Dujmovic |
Last week, I showed you how to Know When to HODL ‘em and When to Fold ‘em when it comes to your crypto investments.
The secret weapon you need in your arsenal?
Market sentiment analysis.
Crypto sentiment is basically the collective mood of investors, traders and enthusiasts. And it can make a big impact on your trading and investing.
I also gave you a few tools that will help you track sentiment from several sources. You may want to check those out before continuing here.
But, like price movements, sentiment is something that requires constant vigilance. Hype, FOMO and FUD can swiftly stir up volatility.
That could date your latest analysis quickly.
In my own trading, I’ve found routine to be the key to keeping up with the crypto Joneses.
It’s the same principle your parents drilled into you to make your bed or brush your teeth every morning. By including sentiment analysis as a part of my everyday routine, it becomes habit and could help you stay ahead of the curve.
Which is why, today, I want to share …
Your Daily Sentiment Analysis Routine Template
Morning Check-up
- Scan crypto Twitter/X for major discussions while drinking your morning coffee.
- Check top crypto news headlines
- Look at the Fear & Greed Index and note the overall mood (bullish, bearish or neutral)
During the Day
- Monitor for breaking news that could shift sentiment.
- Watch for unusual social media activity around your coins.
- Keep an eye out for unusual whale activity, as this often precedes major sentiment shifts.
- Listen to what influential crypto voices say.
Evening Review
- Compare the day's sentiment trends with price actions, with extra attention on what key technical levels were tested during the day.
- Note what worked and what didn't in your sentiment analysis (what did you miss, what was helpful, etc.).
- Note recurring themes or narratives from the day. This helps spot emerging trends.
Now, this is a rather broad template. That’s intentional.
This is best used as a starting point. Then, once you settle into your routine, you can fine-tune the details to what works best for you.
For example, do you yawn when manually checking Twitter/X?
Or are you interested in finding a way to automate your Reddit browsing?
Well, that’s where you can kick things up a notch.
Advanced Routine: Build Your Own Tools
For the tech-savvy traders out there, there are several online tools and combinations of tools that can give you an edge.
You may already know that platforms like CoinGecko and CoinMarketCap offer comprehensive price, trading volume and other market data points.
But what you may not know is that their interfaces can be paired with other tools.
LunarCrush, for example, specializes in crypto-focused social media sentiment analysis. And The TIE provides sentiment-driven analytics for professional traders.
By integrating these datasets, you can build custom sentiment analysis tools that blend price trends with social sentiment to create unique trading strategies.
That not only cuts down on the number of websites you need to click through. It also aggregates data in such a way that logical connections are easier to make.
For example, by combining price momentum data from CoinGecko's API with LunarCrush's sentiment scores, you could identify coins gaining traction in both price and market buzz.
That could be a potential indicator of a breakout! And definitely something you’d want to be aware of.
Similarly, tools like Santiment provide advanced metrics such as on-chain data, social volume and developer activity, all of which can add another layer of sophistication to your analysis.
But if you are just starting out, these more tech-savvy options may feel daunting.
So, I suggest you stick to pre-built tools or beginner-friendly platforms at first.
Like TradeTheChain. It offers trading signals as well as plug-and-play sentiment analysis features.
With easier-to-navigate tools, you can focus on understanding how sentiment correlates with price changes before you dive into custom tool development. Once you've built confidence, you can explore these APIs and platforms to fine-tune your strategies further.
No matter which tools you use in your market sentiment, there is some time-tested wisdom to be mindful of before you apply it to your investing.
4 Golden Rules of Sentiment Trading
- Don't Trust, Verify: Just because someone with a high follower count says something in fluent cryptospeak doesn't make it true. Follow up on hype you see online to verify what’s real and what’s not.
- Context is King: A negative news piece might tank one coin but barely affect another. Learn to read the room to see how a headline can impact your portfolio positions.
- Reverse Crowd Psychology: When everyone's super bullish, that's often when you should be most careful. As Warren Buffett said, "Be fearful when others are greedy."
- Multiple Sources: Never rely on just one source for sentiment. Cross-reference everything.
Remember, sentiment analysis isn't about predicting the future. It's about understanding the present mood of the market.
It can be very useful to help you make better-informed decisions in the moment. But don't expect it to turn you into a crypto fortune teller.
And, of course, sentiment analysis is just one piece of the trading puzzle.
Think of it as a powerful tool in your trading toolkit, not the whole workshop. You'll want to combine sentiment analysis with:
- Technical analysis of price trends and patterns
- Fundamental analysis of project developments and tokenomics
- Risk management strategies
- Broader market and economic conditions
And above all else, remember the ancient crypto wisdom: Never invest more than you can afford to lose. And never take trading advice from someone who claims they can predict prices with 100% accuracy.
Happy trading and may the market sentiment be ever in your favor!
Best,
Jurica Dujmovic
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