# SENTIMENT ANALYSIS IN CRYPTO TRADING

By [FlendCryptoClub](https://paragraph.com/@flendcryptoclub) · 2025-08-21

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A study to master traders' emotion-led actions

We can't say if it is fundamental or technical analysis, usually classifi ed on it's own as sentiment analysis. Sentiment analysis digs deep into crypto users' emotions that turn to candles on a chart. When a news update — crypto related is released, it triggers a ripple reaction among users, can be bearish when it's negative news and bullish when the news is positive.

**What is sentiment analysis?**

Sentiment analysis considers traders' feelings/emotions and opinions towards a coin. This branch of analysis uses tools like fear and greed index to show what investors are thinking. It allows you to get a sense of whether people are feeling bullish, bearish, or somewhere in between about a particular asset. Think of it like reading the room — but on a much larger, digital scale.

**How to use sentiment analysis in trading**

Generally, when a negative chatter about a particular coin gains momentum and spread, it reflects in the way people trade that asset. Elon Musk tweeting about Dogecoin created enough reaction to affect it bullishly.

1.  By analysing the frequency a token is mentioned and in what direction it is propelling, you can take action before others.
    
2.  The Fear & Greed Index. This tool aggregates factors like volatility, momentum, and social media trends to create a scale that represents market sentiment 0-100. Savvy traders might start purchasing assets when the market is fearful (F&G<30) and selling them when the market is greedy (F&G >75).
    
3.  Savvy traders employ the contrarian approach, i.e, be greedy when others are fearful, be fearful when others are greedy. Per Warren Buffet.
    

Extreme buying is mostly followed by drastic selling and vice versa.

4\. The prices of cryptocurrency can change depending on the sentiment of the public, natural disasters in a country, global news, crises between countries, etc, following international news is almost as important as social media news.

**Developing healthy strategies with sentiment analysis**

1.  Use together with other tools, like the Moving Average. When the 50-day MA rises above the 200-day MA, signals growing confidence and a good time to buy or when the 50-day MA dips below the 200-day MA, often signals waning confi dence and a possible bearish reversal.
    
2.  Monitor whale wallet when there is a surge in social media presence of a particular coin. Increased activities from such wallet means market is about to move.
    

**Examples of when emotions moved the market**

During the 2017 bull run, the price of Bitcoin increased by over 1500%, mainly due to a FOMO-driven market. In another case, during the 2023 market correction, the collapse of both Terra Network and FTX created a major fear in the market, resulting in a significant asset liquidation by investors.

  
**Summary**

Keeping traders' sentiment in mind will enhance your trading skills. Following social media accounts of personalities that pull weights cannot be regretted as their many followers act according to their tweets.

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*Originally published on [FlendCryptoClub](https://paragraph.com/@flendcryptoclub/sentiment-analysis-in-crypto-trading)*