Here’s How to Spot a Crypto Market Bottom, According to Santiment

Blockchain analytics firm Santiment has revealed how identifying market bottoms is crucial for strategic portfolio management as the cryptocurrency market’s volatility can test the resolve of even the most optimistic investors.

It is hard to overstate how much recent events have affected investors. People often base long-term predictions on recent price actions. A small drop can cause many pessimistic predictions and a slight rise can cause too much excitement. This emotional thinking, while typical, often leads to poor trades.

Santiment’s ‘Social Trend’ Factor

Santiment analytics noted that simple signals like “up” or “down” can give a valuable picture of overall market sentiment. These mixed feelings can show common biases and indicate possible chances to go against the crowd. Since small investors often oppose big firms, watching social media news can show what might happen next.

Even when the market is falling heavily, signs that big investors are buying can offer hope. While the crowd is often wrong about prices, whales—those with a lot of money—can change the market. Watching what these key players do is very important. The best times to buy at the bottom are often when prices fall, as these large investors carefully buy assets.

“A mild -3% drop in Bitcoin’s price can illicit a sudden bearish narrative with the crowd and result in a flurry of social posts like “$BTC is going lower” or “See you at $15K, Bitcoin”. Or alternatively, a +3% rise could lead to a sudden surge in “Bitcoin will soon be $150K, ” Santiment states.

In addition to tracking key stakeholders, investors can analyze whale transaction volumes for their preferred cryptocurrencies. A sustained period of price stagnation or decline, coupled with a subsequent surge in high-value transactions (e.g., $100,000+ or $1,000,000+), can signal significant accumulation or preparatory transfers by whales, presaging a potential price reversal.

Social Dominance FUD/FOMO Signals

In the context of crypto markets, social dominance is a fascinating albeit complex indicator. Big jumps in social power, with primarily good commentaries, usually mean lots of FOMO (fear of missing out).

Notably, this often causes more buying because people don’t want to miss out on making money. This has frequently happened before prices hit their highest point, as the market gets too hot and is ready to drop.

On the other hand, small jumps in social power, with negative commentaries, show the opposite – lots of FUD (fear, uncertainty, and doubt). This negative feeling can make people sell a lot, which can be a good chance for smart investors to buy low.

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