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The Boom in Digital Currencies is Set to Continue :Sentiment Data Analysis

Last Updated March 4, 2021 4:55 PM
Andrew Quentson
Last Updated March 4, 2021 4:55 PM

The boom in digital currencies will continue according to Maksim Balashevich, Founder of Santiment, a crypto-market that combines sentiment data indicators with a reputation-backed financial content network.

The combined market cap of all digital currencies is nearing $30 billion, with many of them seeing all-time highs, beginning with bitcoin which surpassed gold parity earlier this year, ethereum which has risen from a bottom of $5 to $50 as well as dash, ltc, monero and others.

Balashevich told CCN.com:

“Basically the lack of mass-media attention is the most visible sign [that the boom will continue]. When the spiegel.de (I’m from Germany) will publish an article about the “digital token economy”, you could expect the “boom trend” to be close to the end.”

The prediction is based on Elliott Wave theory, a technical analysis method based on fear and greed movements with periods of mass euphoria and mass pessimism. Balashevich says “the sentiment in the whole crypto space is pretty strong. More and more indicators are telling we are about to experience a good retrace/correction.”

In particular, currencies focused on smart contract technology, such as ethereum, and anonymity, like Zcash, are expected to gain the most. Regarding bitcoin, Balashevich says:

“Short and mid-term: seems to be a bit too positive with too many attention to Japan, accepting the BTC for the normal shops. Long-term: mixed picture, but generally negative enough to allow the rise.”

Balashevich says that trading on sentiment data works “perfectly in identifying the tops,” but, of course, identifying the top can be fairly difficult as traders are usually in competition with each other in what some say is a zero sum game. Balashevich says:

“From what we’ve seen in the cryptomarkets the last years, the tops are build when everyone (crowd) wants to buy. Just shortly thereafter we always have the sharp decline. Though it appears to be reasonable and logical not to buy at this point of the market, yet, it is psychologically difficult. To make it even more difficult, we also have many “pumpers” (some doing it on purpose, trying to manipulate markets, the majority truly believe the price can keep growing).

Don’t join the crowd at the “we are going to the moon” moment. Make sure, you aren’t the one who is buying the top. The rest (buying at the reasonable price) will come more or less by itself.”

Trading is often tempting for new investors, but it requires considerable skill and experience, therefore the usual advice is to not trade unless you are confident you can beat the market – a very difficult aim since you are competing with everyone else.

Most, therefore, tend to cost-average or buy and hold for a reasonably lengthy period of a year or more. For those who do trade, any advantage may be considerable. Sentiment data might be it, but the field is still relatively new.

Nonetheless, blockchain based money is clearly gaining much attention, with the total market cap more than doubling since its all-time high in 2013. New investors, therefore, appear to be coming outside of this space, rather than same investors shuffling between coins.

As such, the industry has grown and has become much more diverse, with many new projects taking advantage of smart contract functionalities, while at the same time bitcoin seems to have gone mainstream as far as brand awareness is concerned.

Balashevich says this will continue. We hope so, but as they say about predictions, they are difficult, especially when it concerns the future. Diversification is the game. Both within and outside of this space.

Disclaimer: The article author is not a financial advisor, therefore does not aim to provide any advice nor should any of the above be taken as advice. As such, any of the above statement is relied upon solely at your own risk and discretion.

 Featured image from Shutterstock.