At Defy Trends, our specialty is gathering and analyzing data from both on- and off-chain sources. Notably, we use data from social media websites and elsewhere on the web to generate the best insights into where cryptocurrency markets are going. One of the most important tools in our arsenal is sentiment analysis, and this article will explain some basics of how we use sentiment analysis to identify patterns and trends in the DeFi market data.

Sentiment analysis is a type of natural language processing used to identify and quantify the emotional or affective content of texts. More simply put, sentiment analysis uses advanced tools from data science to understand how people feel about the things they’re writing about online.

If you measure that there were 10,000 tweets yesterday about Solana, it doesn’t tell you that much about how people feel about it. And analyzing the sentiment of each tweet is time-consuming and subjective.

Sentiment analysis helps us to analyze textual data points and decide whether the text data we have collected represents positive, negative, or neutral opinions — and the relative proportions of each. For this reason, sentiment analysis is sometimes called opinion mining. When used in the analysis of cryptocurrency markets, sentiment analysis can be used to analyze — and make predictions about — price trends and movement patterns.

While sentiment analysis sees wide-ranging use in the advertising and product marketing industries — for example, mining product reviews for overall opinion trends — its use as a predictive tool in the crypto space is advantageous because of how susceptible crypto prices are to social media hype.

Sentiment Analysis in Cryptocurrency Markets

Mining social media and news sources for crypto sentiment allows us to look at a massive number of data points. A popular product on Amazon might have tens of thousands of reviews, but even that amount of text is dwarfed by the amount of text in crypto-related tweets, Reddit posts and comments, Discord chats, Facebook groups… the list goes on.

And while the prudent crypto investor can and should stay on top of the ongoing crypto social media conversation, it’s impossible for a human to ingest the sheer volume of data that our processes and algorithms can while running 24/7.

So how does it work?

Our processes scrape websites for conversations based on keywords, paying special attention to established crypto spaces such as certain subreddits or crypto-focused Twitter accounts. The text from these posts is parsed and organized based on the text meta-data (such as the time and date of the post) and then our natural language processing (NLP) tools analyze syntax, sentence structure, and morphology.

Once NLP is done, posts can be assigned numeric values based on what our algorithm predicts is the opinion. The most basic form of numeric assignment would assign 1 to a positive post, and -1 to a negative post. This stage allows for spot-checking — if a post appears negative to a human but the system thinks it is positive we can find out where that assumption came from and tune the system for subsequent analyses.

With numeric values assigned to specific posts, we can quantify how much positive sentiment is being generated for a particular cryptocurrency, and how well that sentiment correlates to price action. A variety of techniques such as linear regression can verify the statistical significance of this correlation and rule out with relative certainty the possibility that sentiment and price action are only correlated through random chance.

This article seeks to provide a basic explanation of these concepts, but there are a lot more moving parts and challenges to analyzing massive troves of social media data with sentiment analysis. Our next Medium post will dive deeper into the complex and fascinating world of sentiment analysis.

At Defy, we are committed to giving you the education and tools needed to navigate the exciting world of cryptocurrency investing. Follow us here on Medium and on Twitter to read more articles like this, and make sure to subscribe to our newsletter for the latest updates about the Defy platform that will be introduced later this quarter.

About Defy Trends

Defy Trends is an intuitive, all-in-one crypto and NFT intelligence platform that empowers individual and institutional investors to make confident data-backed investment decisions. The Defy Trends platform includes sentiment analysis, the Defy Trends Score news aggregation, on-chain analysis, AI forecasts, in-depth educational materials, and crowd-sourced research. Learn more about Defy Trends

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I know Paypal charges over 4% as transaction fees, which can be very annoying, but most of us don’t worry about it because at least, we finally got paid, and it’s just a measly 4%. But crypto offers lower fees, which is highly beneficial.

Let’s say you want to pay a freelancer or settle whatever payment you have pending; Bitcoin, for example, offers transaction fees as low as 1%. The only caveat is that both parties must have a crypto wallet. Plus the fact that if the person is a newbie in the crypto space, you’d have to offer a detailed guide on how they can set up a wallet, and well, convince them that they won’t get scammed. Asides from that, you’re good to go.

I have a client who pays me in crypto, and it’s one payment I enjoy getting every month because of how fast and seamless it is. In Nigeria, for example, it’s quite difficult for freelancers to receive payments from foreign clients. Although many services are available, there are still many hurdles you have to scale through.

Think Paypal, for example. They don’t allow Nigerians to withdraw directly to their Nigerian bank accounts. Although services like Xoom and the newest Flutterwave-Paypal partnership have come to solve this problem, some accounts don’t enjoy the luxury.

And the thing is, many companies prefer Paypal as a means of payment, but it’s not as seamless as cryptocurrency.

Crypto automatically widens your talent pool because now you have an alternative that makes it easy to send and receive payments (quickly).

At least twice a month, we have either one of Dogecoin, Bitcoin, or Ethereum trending on Twitter, which brings heavy engagement.

Cryptocurrency means different things to different people. It’s a way to get rich(quick); for others, it’s a way to fight the existing monetary system, and for others, it brings them hope. Whatever category you fall under, have it at the back of your mind that accepting cryptocurrency is great for marketing.

How?

Not every business has embraced cryptocurrency. In fact, there are still many people out there who think crypto is a scam and believe that it’s just a bubble. Still, there’s a large army behind crypto, and if you identify as a business that accepts crypto as a means of payment, you are automatically part of that army. These people will support you because it’s a movement.

Plus, because most people who are into crypto are the younger masses, expanding your payment options through crypto will surely expand your customer base.

Because of how rapidly cryptocurrencies grow, companies can accept them and store them. And unlike fiat that loses its value over time because of the government printing it excessively (inflation), Bitcoin for its limited supply, and well, unlimited demand, will increase in value over time, and as Charlie Shrem put it;

Bitcoin is Cash with Wings

While there are still cons that come with accepting crypto, your business has much more to gain by joining the train. But it’s important to Do Your Own Research before jumping on any cryptocurrency because the market is highly volatile.

But accepting crypto as a means of payment as a freelancer and business has many benefits today.

Thank you for reading

Spreading messages and stories is undoubtedly an innate human feature, yet it is a shame that the budding creativity of millions of individuals is being overshadowed by the monopoly model of the traditional financing models we see currently.

Flickto provides an alternative to traditional financing and business models within the media industry. Our model places unique human experience and diversity at the forefront while aiming to generate sustainable profits from the projects we develop, produce and distribute.

Disrupting Media

Traditional media as we know it today is a very centralised entity. Take Disney for example. In 2021 Disney’s revenue was one-fourth of the mainstream media’s overall revenue of $21.4 billion. By acquiring other major media franchises such as Marvel and ABC News, Disney has cemented itself as an industry powerhouse.

This can be very problematic and leads to a media that is solely focused on the narrative that they wish to portray, which is not necessarily in the best interest of the masses as profit incentives take priority in current times.

This is where we intervene. The media’s direction is diminishing the creativity and storytelling that we as consumers yearn to see. We want to bring this back. Content should be used to entertain and bring joy into the lives of those who consume it. There are stories from all around the globe that is eagerly and deservingly waiting to be heard.

Through staking ADA in exchange for $FLICK, you can be a part of a great community that has a direct impact on projects that promote diversity and positive influences through multiple measures;

We have tailored the staking of the $FLICK token to have proportional representation to prevent those with larger holdings of $FLICK from getting an unfair voting advantage, especially as this would be counterintuitive to Flickto’s objectives.

Films will be judged on originality, creativity, plot, pacing, structure, characters, cinematography and entertainment value, as well as on the effectiveness of the message and the ability of the filmmaker to reach an audience.

If only it stopped at the benefits of voting. We believe that the support of the community should be reciprocated, thus through staking your ADA with $FLICK you will receive rewards and royalties that increase over time. Not only that, but holding $FLICK gives you access to receive a portion of the distribution rewards of funded projects.

We want to ensure that we bring back the essence of storytelling and entertainment that we all know and love, whilst rewarding both the content creator and our #FLICK community.

I first got into crypto in 2018, but I took the full time plunge on December 10th, 2020. A year later I wanted to capture a couple thoughts and share a couple folks who I used to help find my way through this overwhelming landscape. #crypto #cryptocurrency #DAO #blockchain

And yes. I am ashamed to be posting a link from Linked in. Feeling so 2010.

www.linkedin.com

[DISCLAIMER: the views expressed are the author’s own and do not necessarily represent those of HOGE Finance, the HOGE Association, the community of holders, or any other body]