Introducing Sentiment Analysis

Sentiment Analysis.

One of the 3 pillars of Market Analysis is Sentiment Analysis

In a market which is often thought of as intangible, value is highly subjective and sentiment represents the 'wisdom of the crowd'.

Sentiment towards crypto is usually measured by monitoring and analysing leading social networks. (e.g. X-Platform)

Sentiment analysis has potential to direct the Decentia search engine to new areas of volatility, for subsequent analysis and trading.

Certain financial instruments can incorporate a Sentiment engine which monitors what people are saying, on social networks, about aspects of the cryptocurrency .

A sentiment engine can detect bearish signs of extremely positive sentiment, leading to an uptrend and bullish signs of extremely negative sentiment, leading to a downtrend.

Sentiment is used to assess the overall market mood. It is good for identifying changes of market direction and price movements.

A sentiment engine can also detect for future reversal of a downtrend (extremely positive sentiment) and for reversal of an uptrend (extremely negative sentiment).

By comparing Sentiment with market price data, the Sentiment engine can obtain early warning of advantageous trade set-up opportunities.

One of the main advantages of correlating sentiment analysis with price data is that it can identify and help set up medium term, counter-trade opportunities.


CyberTrade - Sentiment Analysis

Interpreting Changes in Public Interest.

The job of a sentiment engine is to interpret changes in public interest. For example:

A sustained upward trend accompanied by moderately increasing public interest often leads to trend continuation.
A sustained upward trend accompanied by a spike in public interest often results in a retrenchment.

By correlating price movement with public interest, the sentiment engine can predict future price movement / areas of volatility.

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Positive / Negative Sentiment & Public Interest.

Positive / Negative sentiment can be gauged by tracking key words on social media. Sentiment is generally scored as plus or minus values, ranging between +100 to -100.

Public interest is measured by social feeds which track the number of key word mentions on major social networking websites..

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Monitoring sentiment on X.

X is a great platform for monitoring social sentiment towards the cryptosphere.

Firstly, X is global.

Secondly, there are over 6,000 tweets per second,.

Thirdly, the concise message means that messages are very focused and crypto currency information is easily recognised by scanning algorithms.

Finally, sentiment may be driven by news which often breaks on X first.

All of this means that X provides fast acting measurements of social interest in crypto.

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Turning X data into a leading indicator of price movement.

Firstly, X sentiment engines scan 6,000 tweets per second to identify those referring to a particular topic (e.g. Bitcoin HODL). Hits are then filtered,. and surviving tweets (typically < 10%) are scored.

Secondly, scores are aggregated per coin/token and added to the trend-line for each coin/token. Trend analytics are then used to produce actionable data, often in the form of a sentiment trading indicator.