Blog-new-logo-2023Blog-new-logo-2023Blog-new-logo-2023Blog-new-logo-2023
  • CRYPTO NEWS
  • TOPICS
    • Futures Trading
    • Crypto Basics
    • DeFi
    • Metaverse
    • NFT
    • Blockchain
  • CRYPTO VERSE
    • Personal Finance
    • Cryptocurrency
    • Price Predictions
    • Crypto Deep Dives
  • PRODUCT
    • Tutorials
    • Product Features
    • Security
  • COINDCX
    • Announcements
    • Community
    • Crypto Competition
    • Listings
    • Opinion
    • Stories
Visit CoinDCX
✕
            No results See all results

            Impact of Sentiments in Cryptocurrency trading

            In today’s world, it is quintessential for companies to know what their customers are talking about their products online, and sentiment analysis helps in the same, that is, to gauge the perception of customers or the general public towards a product or a service.

            15 Apr 2020 | 4 min read
            Sentiment Analysis CoinDCX

            How many of you go through reviews before purchasing a product or a service on any e-commerce marketplace? I bet, many of you. But, how many reviews do you read? Five, ten or at maximum twenty. Ever thought of a system that can analyze the reviews for us and save us from the painful process of going through the reviews manually and that too in few seconds. And since the system has considerable computational capabilities, it just does not restrict itself to five or ten reviews but tens of thousands of reviews at once. The above process of analyzing is made possible using sentiment analysis and just one use case out of many use cases of sentiment analysis.

            According to Wikipedia, “Sentiment analysis refers to the use of natural language processing, text analysis, computational linguistics, and biometrics to systematically identify, extract, quantify, and study affective states and subjective information.”

            In today’s world, it is quintessential for companies to know what their customers are talking about their products online, and sentiment analysis helps in the same, that is, to gauge the perception of customers or the general public towards a product or a service.

            Sentiment analysis are mainly polarity based, aspect-based or emotion detection-based. How polarity-based sentiment analysis works is, it focusses on the text and classifies the words into positive, negative and neutral terms. The higher the number of types of terms, the text is categorized into that polarity. Emotion detection, as the name indicates, detect the emotion like happiness, sadness, and anger based on the text. Whereas, aspect-based sentiment analysis determines the aspects or features of the products that the customers are interested in.

            Like stock or commodity markets, it is believed that news and social media tend to affect the cryptocurrency trading as well. And based on the sentiments of the unprecedented news, there may be price fluctuations in the crypto-market. This has led to an increase in usage of sentiment analysis to gauge a significant relationship between the news and the price of cryptocurrencies. In the past few years, many such instances lead us to believe that the theory holds. One such instance comes from November 2017; crypto markets, specifically Bitcoin saw a drastic surge in the prices which got fuelled from positive reviews from the business houses and an increase in retail investors. Further, after one month, Bitcoin faced a great slump in their history as a result of attacks from government authorities, skeptical influencers, and other business communities.

            Crypto markets are unregulated, unlike the stock, commodity or currency markets. As a result, any news, positive or negative, regarding the markets tend to influence it substantially. Moreover, unlike broader markets, cryptocurrencies are decentralized networks and are managed by a diverse set of retail investors spread across the world. Therefore, it is believed that sentiment analysis in the field of cryptocurrencies can help in gauging public sentiment.

            However, there are certain limitations in using sentiment analysis for cryptocurrencies markets. One of the limitations is the inapplicability of general NLP (Natural Language Processing) technologies in domain-specific problems like cryptocurrency market analysis. In a general API, we need to train the model in such a way that they recognize the domain-specific terminologies used to implement sentiment analysis. Further, sentiment analysis itself has drawbacks that limit its usage in the crypto markets as these markets are still in a nascent stage. It is difficult to analyze the sentiments with NLP techniques, which form the backbone of sentiment analysis if the text contains ironies, bad grammar, sarcasm, etc. For an example, a response to ‘Did you like our services pleasant?’ can be ‘I could not agree more’, this response can be taken as negative by the model as it contains terms ‘not’ and ‘agree’ together. Similarly, there are multiple instances like this where NLP techniques will not be able to deliver results up to the mark.

            Sentiment analysis has already made inroads in the crypto markets. However, the implementation of domain-specific NLP models and rigorous machine learning algorithms can make it effective in the cryptocurrency market space. As the cryptocurrency markets evolve like the broader ones, we can expect sentiment analysis to gauge the public sentiments more conclusively and predict the fluctuations of the market related to it.

             

            _______________________________________________________________________________________

            About the Author:Abhishek Kumar is pursuing MBA in Finance from IIM Lucknow. A computer science graduate who has worked in Fintech industry, he is always keen to learn about developments in financial sector, technology and innovation.His interests include eclectic reading, and technical and experiential writing.”

            Share
            CoinDCX
            CoinDCX

            Related posts

            Cybersecurity at CoinDCX: Protecting Your Assets At Every Step 

            CoinDCX’s multi-layered security ensures a trusted crypto ecosystem.


            Read more
            19 Jul 2024
              | 3 min read

            Is CoinDCX Safe?

            Rest assured, CoinDCX users’ funds are safeguarded at all times.


            Read more
            18 Jul 2024
              | 10 min read
            Logo_CoinDCX
            Company
            • About Us
            • Blog
            • Careers
            • Fees
            • Proof of Reserves
            • Partners
            • Bug Bounty
            • Community
            • Policy
            • C.I.P. Fund
            Product
            • Spot Trading
            • Margin Trading
            • Convert
            • Futures Trading
            • Earn
            • VIP
            Support
            • 24/7 Chat Support
            • Support Center
            • Terms of Use
            • Privacy Policy
            • Risk Disclosures
            • Security
            • Terms of Use: Web3 Wallet
            • Media Kit
            Business
            • OTC
            • API Broker
            • Enterprise
            • New Coin Listing
            • Ventures
            • Affiliate
            Buy Cryptos
            • Buy Bitcoin
            • Buy Ethereum
            • Buy Solana
            • Buy Ripple
            • Buy Dogecoin
            • Buy Shiba Inu
            • Buy Pepecoin
            Price Prediction
            • Bitcoin Price Prediction
            • Ethereum Price Prediction
            • Ripple Price Prediction
            • Dogecoin Price Prediction
            • Solana Price Prediction
            • Litecoin Price Prediction
            • All Price Predictions
            Contact Us

            Press Enquiries write to [email protected]
            Regulatory Issues/Enforcement Authorities: [email protected]
            For Grievance Redressal, Click here to know more.

            Disclaimer

            Crypto products & NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information and material contained herein are subject to change without prior notice including prices which may fluctuate based on market demand and supply. The material available on the site is proprietary to CoinDCX, its parent, Licensor and/or its affiliates and is for informational purposes and informed investors only. This material is not: (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, or (ii) intended to provide accounting, legal, or tax advice, or investment recommendations.

            *Internal CoinDCX Data as on 6th May 2025
            *Quarterly trading volume for Q4 FY’24-25. Currency conversion rate applied as in data capturing period
            *FIU Registered entity, NEBLIO TECHNOLOGIES PVT LTD
            *Certified in India for May 2023-24

            © 2024 All rights reserved

            Visit CoinDCX
                      No results See all results
                        Download App