These tools are usually integrated with different crypto exchange platforms and may even have different names.
However, the purpose of these tools remain the same – to indicate the market sentiments.
All these tools are quite powerful but should be used correctly to gauge the trends and movements of the assets in the market as well as the behavior of the participants in it.
These are the indicators of a bullish or bearish market coming up. These indications will enable you to act accordingly to make your investments more productive.
It will also help you to eliminate the risks involved in making such trades in such a volatile market.
8 Best Crypto Market Sentiment Indicators
Knowing the different aspects of the market and human behavior will ensure that you make proper and more productive trading decisions.
You will not have to rely on the claims made by the market, which are often not reliable enough to make smarter investment decisions.
Here are some of the indications that the crypto market sentiment tools will provide you with.
1. Fear or Greed Indicator
There are specific tools that will enable you to understand the fear or greed of the participants in the crypto market.
This is directly linked with the sentiments of the market because it is the investors that play a significant role in it.
Understanding fear and greed of the investors is not at all difficult when you use specific tools of reliable crypto exchanges.
There is a needle that indicates whether the investors are feeling scared or bold.
If the value is low and closer to 0, it indicates fear and if it is near to 100, it indicates that the investors are greedy.
Buy and sell your crypto assets accordingly.
2. Bull or Bear Market Indicator
The indication is however based on the conversations and discussions about the crypto market on different social media platforms such as Reddit, Twitter, BitcoinTalk, and others.
The value, which ranges between 0 and 1, is calculated with a classifier.
This classifier can understand languages that are crypto-specific and segregates these conversations from the large number of social media conversations.
This will indicate the moods of the investors which will in turn help you to analyze the market.
You can create your trading strategy based on the bullish or bearish movements of the market.
3. Social Media Sentiments Indicator
You will also need to understand the social media sentiments for a proper crypto market analysis. For this you will need to use specific tools that will indicate such sentiments specifically.
The indications are nearly perfect with the use of complex technologies such as Artificial Intelligence and Natural Language Processing.
These provide a far more accurate market sentiment report that will help you to analyze the attitude of the market and its participants.
Also, you can make use of the monitoring algorithms to gather the vital and meaningful responses of the crypto community on trending topics related to cryptocurrency, summarize them, and analyze them to make a more productive trading decision.
4. Events and News Indicator
The current news and latest events in the crypto circuit will also indicate the future trends of the market and help you to analyze it.
There are some specific news aggregators that will also allow you to automate your analysis.
Events and news are one of the most significant maret indicators because these are collected and processed from thousands of sources including social media platforms, articles and blogs written on different websites and more.
With the use of some sophisticated apps you will not only get all the trending events and news in an instant but will also be able to save a lot of time on your research.
With live feed and summarized crypto news that will keep you updated, you can stay ahead of other traders.
5. Commitment of Traders Indicator
There are also a few other potential indicators you should watch out for in the future as well.
The COT or Commitment of Traders Report will indicate the trends in the futures of forex and bitcoin.
This will help you to know the ever-increasing futures volume, most specifically on its extreme levels.
Apart from that, this report will let you know the reversal areas in the trending market.
6. Volatility Indicator
The volatility indicator will also help you a lot in understanding the sentiment of the crypto market and analyze it to make proper price predictions and create a successful trading strategy.
Different websites have different volatility indices and therefore you should choose one that indicates the historical volatility specifically.
This will help you to establish a strong correlation between your analysis and the indicator.
7. Put and Call Ratio Indicator
A few specific crypto market sentiment tools will also allow you to know precisely about the put and call ratio.
This particular indicator will once again let you look at the two extremes of trading volumes that will enable you to determine how and when you should hold your positions.
8. The ‘When Pigs Fly’ Indicator
The crypto market is known to have quite a large number of low cap coins that are of low quality and poor in performance.
Sometimes, these coins may reach a higher price but this typically is an indicator for exercising extreme caution if you wish to trade with these coins.
However, poor fundamental assets like these often rally at the end of the market cycle.
Using proper tools will enable you to avoid making mistakes in your crypto trading strategy.
Crypto market sentiment is one of the most important factors that affects the price movements of the market.
Understanding it using different tools and indicators is therefore very necessary for technical and fundamental analysis.