It’s no secret that in any market, sentiment is important. Sometimes more important that actual fundamentals itself. This is especially true for such a volatile, emerging market such as crypto. A lot of new traders and investors get frustrated by this. However if you truly learn to read and apply sentiment, you can actually use it to your advantage and make significant gains on your trades. In this article we’ll be taking a look at 3 examples of when sentiment was more important than the fundamentals themselves, and how you could learn from this to greatly benefit your trading.
Example #1: The Justin Sun China Fiasco
On July 23rd, 2019, the price of Tron suddenly and inexplicably plunged over 15% when rumor spread that Tron founder Justin Sun was embroiled in some legal troubles in mainland China and arrested. As it turns out, the rumor was an entire hoax, Mr. Sun soon posted video evidence of himself in San Francisco, and the price of Tron shortly recovered (more of that in one of our previous articles). Although from a long-term investor standpoint it doesn’t really matter. As a trader you could have made very sizable profits.
Suppose you heard of the Justin Sun news a bit earlier than the rest. You could have then put in an early leveraged short position on Tron. And then as soon as the news gets confirmed to be false, immediately close your position and lock profits. Now I know you’re thinking this is easier said than done. After all if everyone could receive early trading and sentiment signals wouldn’t we all be millionaires? This is where the CryptoMood app is a true game-changer. CryptoMood uses cutting-edge AI technology to gather sentiment from 50,000 different sources, which gives you quick & early trading signals allowing you to make the most profitable trades possible.
Example #2: The EOS June 1st Announcement
Another great example of how you can use sentiment to your advantage when trading is the Block.One EOS event that happened on June 1st this year. Block.One had hyped the event for a long time, prepping the EOS community for some earth-shattering announcement. The event itself wasn’t a failure. Block.One rolled out many exciting developments including a Coinbase partnership, EOSIO 2.0, and it’s Twitter competitor Voice. Unfortunately, due to the fact that they overhyped the event, the general sentiment of the community was that of a let-down, and the price reacted as such shortly after. For the long-term investor, it probably doesn’t matter that much. But as a trader, picking up on early sentiment signals could have again netted you meaningful profits. Once again CryptoMood is the perfect app for this!
Example #3: The Verge “Partnership”
In early April 2018, the controversial privacy coin Verge announced a major partnership in the works. The catch however, was that they needed to raise $75 million from the community in order to announce it. Obviously this raised a lot of red flags and the majority of the cryptocurrency community wrote it off as a scam. Inexplicably however, the price of Verge began to surge. The price of Verge ran up some 341% between the initial request for $75 million and the announcement of the partnership. This was because although the announcement was a clear farce, the sentiment amongst the Verge community was good enough to drive the price up. Of course the announcement turned out to be the disappointment that everyone expected. However if you learned to use sentiment to your advantage, you could have made significant profits both leading up to the announcement, and shorting it when it turned out to be the disappointment everyone expected!
These are just a few examples of how, when and why reading sentiment is so important. In a wildly speculative market such as crypto, reading the sentiment can be even more important than the actual fundamentals themselves. The best app for gauging sentiment is the CryptoMood app. Rather than relying on human interpretation, CryptoMood uses a cutting-edge, science-based, AI algorithm to gather sentiment from 50,000 different sources. Bringing you the best & earliest trading signals for all your important trading decisions.
Written by Ezra Yao