What Is Sentiment Analysis? Sentiment analysis is the process of detecting positive or negative condition of a human for a product or service. It’s used by businesses to detect sentiment in social data, brand reputation, and understand customers behaviour.
Since customers express their thoughts and feelings more openly than ever before, sentiment analysis is becoming an essential tool to monitor and understand that sentiment. Automatically analyzing customer feedback, such as opinions in survey responses and social media conversations, allows brands to learn what makes customers happy or frustrated, so that they can improve products/services to meet their customers’ needs.
History Of Crypto Sentiment Analysis?
Sentiment analysis has been around for a long time but it took off in the early 2000s as social media platforms started to emerge in the society.
It was first used by online shopping giants like Amazon and politicians like Barack Obama to gauge public opinion without having to read every single comment. As of about 2010, sentiment is used for trading. First its use for stock market trading then sentiment analysis used for cryptocurrency trading too.
How Does Sentiment Analysis Work?
In a sentence, sentiment analysis involves analyzing a text to determine whether it is positive, negative, or neutral
This is done by assigning a score to each word depending on how negative or positive it is, and then adding all those scores together to see what the overall sentiment of the market.
Why Crypto Sentiment Analysis Important?
Sentiment analysis is extremely important because it allows businesses to understand the sentiment of their customers towards their brand. By automatically sorting the sentiment behind social media conversations, reviews, and more, businesses can make better and more informed decisions.
The importance of sentiment analysis is also immense in the case of stock market and cryptocurrency trading too. Sentiment analysis can be used to fit market price signals effortlessly in advance. It’s helps traders to take perfect trading action for sure.
Also Read: Bitcoin To $100k in 2021 Possible or Not?
Types of Sentiment Analysis?
Sentiment analysis models focus on polarity (positive, negative, neutral) but also on feelings and emotions (angry, happy, sad, etc), urgency (urgent, not urgent) and even intentions (interested v. not interested).
Depending on how you want to interpret customer feedback and queries, you can define and tailor your categories to meet your sentiment analysis needs. In the meantime, here are some of the most popular types of sentiment analysis:
Sentiment Analysis In Cryptocurrency Trading?
If you can detect the emotions of investors in advance with sentiment analysis on say, social media platforms like Twitter and Reddit, you could theoretically predict the price action of any cryptocurrency.
Bitcoin Fear And Greed Index?
The fear and greed index for cryptocurrency is modeled after the fear and greed index for the stock market which was created by CNN’s financial division. Both are updated on a daily basis
Like the fear and greed index for the stock market, the fear and greed index for cryptocurrency is created using an aggregate of metrics that are also worth looking at separately to analysing current market condition.
Bitcoin Bull And Bear IndeX?
In contrast to the fear and greed index, the bull and bear index focuses exclusively on bitcoin sentiment on social media platforms, specifically Bitcointalk, Reddit, and Twitter
More importantly, the bull and bear index is updated every hour which makes it more suitable for active day trading.
Santiment And LunarCrush?
LunarCrush tracks over 2 thousand cryptocurrencies, and you can rank them using any of the 27 sentiment and price-based indicators LunarCrush offers
Like LunarCrush, Santiment tracks a series of social sentiment metrics using data from Twitter, Reddit, and even Telegram for nearly 2000 coins and tokens
Altcoin Sentiment Analysis Trading?
Sentiment analysis’ forecasting features are more powerful for mid and small cap altcoins. This is because their price discovery is more organic as they are not the focus of market manipulation.
Even though many mid and small cap altcoins are also manipulated from time to time, usually that manipulation is coordinated through social media.
Because most if not all this information is out in the open, sentiment analysis indicators can often let you get in early and sell right as that pump is peaking Even so, be weary of how that sentiment data is being collected.