Sentiment, or market sentiment, has the same meaning throughout the financial sectors, representing a collective outlook for the state and direction of any market. It refers to the overall emotion demonstrated by market participants.
Understanding the term
The sentiment definition indicates that it is a highly subjective aspect of the market condition that depends on multiple factors at any given moment. Investors, as well as traders in any financial market, such as stocks and cryptocurrencies, use sentiment to base their strategies in regards to the price action of an asset going through market fluctuations.
“Sentiment” is the product of both technical and fundamental analysis. The crypto market sentiments give us an idea about how investors are feeling about any particular opportunity.
Though the crypto sentiment is not a technical aspect in itself, market sentiment analysis is a form of research that can be used to properly evaluate the market’s direction and also try to predict where it is headed to make informed decisions. However, one should always note that sentiment does not reflect an asset’s fundamental data error-free.
Like other financial products, the price of crypto is based on demand and supply, which keeps changing. Sentiment is a way to comprehend the collective attitude of market participants toward an asset.