Keywords to Watch That Signal FOMO and FUD

As has been well documented through our many articles on social trends, we have been tracking sentiment and news trends related to cryptocurrency topics for years. From these trends, interesting patterns have been common occurences that typically foreshadow whether markets are about to turn bullish or bearish. We know that whales control market direction, but the other half of the 'price prediction' equation is the crowd's consistent overreactions.

When everyone feels either too scared or overly excited, the market often moves in unexpected ways. For example, we correctly identified that a market top was looming this past Friday after an unusually high level of crowd euphoria became present. Since this post was made two days ago, predicting a top, the market value of Bitcoin has dropped by -7%:

Using explanations that led us to make posts like these, this article will be focused on five of the words that appear when fear is at its highest—which usually happens when markets are plummeting, often at its bottom. We'll also look at five words that come up when euphoria is taking over as markets rise, often signaling a top.

Cryptocurrency values move based on people’s emotions, and it nearly always moves the opposite way from what their emotions are telling them to do. This phenomenon is especially true when the crowd seems to all be on the same page. Let’s dive in and see how this works, with real links to each keyword that you can bookmark for your own trading advantage:

Fearful Words That Signal Market Bottoms

When the market is feeling down, people often start using specific words more frequently. These fearful keywords, often referred to as "FUD" (Fear, Uncertainty, Doubt) words, can actually signal that things are about to turn positive. Here are five common keywords we often see when the market is near a bottom:

1) Crash: When everyone is talking about a "crash," it’s usually because prices have dropped quickly, and people are panicking. Interestingly, when lots of people think prices will keep crashing, it’s often a sign that the worst is over.

2) Sell: When "sell" becomes a popular word, it means that many people are giving up. They’re scared and want out of the market. Historically, this is often a sign that a recovery is around the corner.

3) Dead: When traders declare that either the entire market, Bitcoin or individual altcoins are "dead", it is an obvious sign of capitulation and a waiving of the white flag. Many traders get nervous and sell off their assets in this situation, but this fear often creates opportunities for the brave.

4) Crackdown (Or Crack Down): Whenever there is news about a "crackdown" in crypto, or some sort of regulatory limitation that makes it harder for traders to have the freedom they crave, there is worry that cryptocurrency is becoming too restrictive. For many, this is the opposite of what crypto inherently should be about - a move away from traditional financial structures. This fear can push prices down, but it often brings good buying opportunities, especially when the panic seems overblown.

5) Liquidation: "Liquidation" refers to traders being forced to sell because of margin calls, and when this word spikes, it means that lots of investors have already been forced out of their positions. Though liquidations happen on both big market gains and market losses, social media tends to bring them up much more often when celebrating the pain of "shorts getting rekt". These short liquidations are historically a great chance for new buyers to enter.

All of the above keywords are signs that many traders are scared and giving up. When fear is this strong, the market often starts to recover because those who wanted to sell have already done so, leaving room for new buyers.

Now on to the overly bullish keywords...

Euphoric Words That Signal Market Tops

On the flip side of things, when the market is booming, people start using words that show excitement and greed. These euphoric, or "FOMO" (Fear of Missing Out), keywords often appear just before a market top:

1) Moon: When people say a coin is going "to the moon," it means they expect its price to keep skyrocketing. When everyone believes this, it can be a sign that prices are too high and a correction is coming.

2) Meme Coins: When "meme coins" start trending, it's typically after Bitcoin profits have been redistributed into more speculative assets that don't have a ton going for them (other than ironic humor that occurs when prices go up). Traders enjoy this, and assets like Dogecoin, Shiba Inu, and Dogwifhat have market caps in the billions of dollars due to the continued efforts of traders to prop these up. But when everyone wants to get in on the action, watch out. This typically signals that prices are overinflated and an entire crypto market top is around the corner.

3) All-Time High (or ATH): When everyone is talking about an "all-time high," it means prices have reached new peaks. This excitement can lead to FOMO, but it’s also often the point where the market starts to turn.

4) Bull Run: If the term "bull run" is on everyone’s lips, it shows that people expect prices to keep going up. Markets, however, often do the opposite of what everyone expects—especially after a long, sustained run.

5) HODL: When everyone is saying "HODL" (a playful term for "hold" that means not selling), it often means that traders believe prices will only go up. When too many people are sure of this, it can signal that the market is overbought and a correction is due.

These words reflect a sense of excitement, confidence, and even greed. When everyone is feeling euphoric, it’s often a sign that prices are too high, and the market is ripe for a pullback.

The Contrarian Approach: Moving Against the Crowd

Taking a contrarian approach to crypto conversations that you are seeing on social media is more often than not the right decision. Just keep in mind that going against the crowd isn't always easy, because the majority of the time, there is a healthy mix of bulls and bears battling one another.

But in often extreme moments where everyone seems to be on board the bullish or bearish train of thought (such as the FTX collapse, or recent rate cuts), this is where a clear picture is generally being painted in Santiment's social trends. The reason it works is that markets need both buyers and sellers. When everyone is already buying or selling, there’s no one left to push the price further in that direction, which is why the market often turns around.

Final Thoughts

Here at Santiment, we track how often these fearful and euphoric words are mentioned. It’s one of the ways we help traders understand the mood of the market. Remember, the next time you see everyone panicking or celebrating, take a moment to think: is this a sign that things might be about to change?

Crypto markets can be unpredictable, but understanding crowd behavior can give you an edge. Stay calm, stay informed, and remember—the best opportunities often come when others are too afraid or too excited to think clearly.

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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.