How to read crowd hype – and use it to your advantage
This is a story of the tool on Santiment main page called "Santrends". It has a few years track record, can be used each day, best performs in days of extreme market moves:
Santrends is a list of words that describe the topics which emerged faster than any others over the last 24 hours. Topics getting more social attraction from the crowd, being discussed much more than any other.
We detect these words by computing the so called hype score for each single word that is present in the social data after filtering and cleaning the data. Once this number is calculated, the words are ranked according to the corresponding scores in a descending order. The top 10 words in the resulting list are the top emerging trends.
One of the latest use cases was "buy the dip" narrative present in Santrends for a few days. We posted a timely insight on it, BTC gained almost 25% since then.
Put simply, a smart traders goes opposite the crowd. He's not doing what Santrends highlights, "buy the dip" for example. Just don't do exactly what the crowd thinks when the crowd shouts it.
This picture shows how a real bottom is different from crowd called "buy the dip" bottom:
Social dominance was almost 3.2% of all talks in crypto space, this is definitely when you don't buy. BTC surged and dumped again.
This is how to use this kind of powerful tools.
All ideas are good, just crowd is almost never right. Rarely right. You're on the safer side when you bet against the crowd.
Another recent use case was when the crowd was talking about "sead and shoulders" pattern, it was visible in Santrends too. It was exactly when no real "head and shoulders" pattern been present. We also posted and insight suggesting how to react properly on it. So you could make a bet - there is no head and shoulders.
Unfortunately it doesn't work perfectly every day, the crowd feelings need to be really intense.
And then Santrends works nicely because it absorbs so much data from all possible crypto related channels and you can make decisions based it's data.
You could have made 20% in just few days. And some of our users did. This is one Santrends use case.
There is another use case, this tool helps to spot tops on altcoins. We did research on it and posted a report.
The reason why we placed this powerful tool on Santiment main page is introducing it to PRO users and getting all acquainted to it.
If BTC and ETH is everything crowd is talking about, then alts are pumping. And opposite. Just need to be a bit ahead of the crowd. We all know it, but knowing is not enough because it's still very challenging. This horizon is changing every day and Santiment has a radar for that.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.