How to Use Santiment Tool to Develop a Trading Strategy

Handy Tips / 21.05.2021

Cryptocurrency trading comes with a lot of uncertainties. Consequently, developers have developed tools to help crypto traders evaluate patterns in trading data. These analysis tools, such as Santiment, prevent traders from making investment decisions based on emotions.

This article reviews the Santiment tool, one of the most excellent data analysis tools out there. The platform has been in use for years and has helped many traders understand crypto markets in depth.

Additionally, with this tool, traders can apply the essential analysis concepts of trading in their analysis. Another great feature about this tool is Santiment’s coins social volume analysis, where one can choose the best enter and exit positions for their trades.

Understanding The Santiment Tool

Santiment is a cryptocurrency market intelligence platform that majors in the accurate and reliable data feed, custom markets analysis, and low-latency signals. This platform has specialized tools that help traders with blockchain activity, sentiment analysis, and market data feed.

In addition, the platform has built prototypes called Santiment Network Token (SAN). Notably, traders access streams of information and market feed by staking the SAN tokens. So how do you acquire these tokens?

You can acquire SAN tokens from LATokens or Ethfinex platforms. After SAN acquisition, you can store them in any wallet with ERC20. Some of these wallets include MyEtherWallet, and it’s free.

The crypto market is full of misinformation, and reputable information sources are minimal. So, this platform has features that help crypto traders make the best trading decisions possible. Let’s review some of the Santiment features for a better understanding.

Content Streams

This feature is similar to a newsletter in that it provides investors with reliable, up-to-date crypto market content. This content includes Initial Coin Offering (ICO) analysis, significant coins, worldwide regulations, and crypto-market research. This wide variety of information helps investors subscribe to the content that suits their needs.

Santiment tool collects market experts’ analysis which is then exposed to Santiment users through content streams.

Santiment Database (SANbase)

SANbase information is crowdsourced from cryptocurrency project databases. The crowdsourced data include relevant project information such as the developer’s team history and the currency’s economics. Besides, the platform has a suite of tools that help crypto investors with analysis.

It is hard to overlook the quality of SANbase data, considering the process it takes before Santiment releases it. The crowdsourced data goes through a panel of experts who ensure the information is accurate. The team is hopeful it will soon be able to decentralize this information without lowering the data quality.

Datafeeds

The other feature of the Santiment platform is the data feed. Santiment platform derives crypto information from several sources and combines them into three data feeds. The three data fees include Santiment data feeds, and blockchain data feeds, crowdsourced data feeds.

Let’s review each one of them for a better understanding.

Santiment Data Feeds

Datafeeds measure crypto-world community emotions about various coins. The information collected from the public is known as market psychology and is a significant driving force for the future of digital markets.

Blockchain Data Feeds

Blockchain data feeds to monitor the activities throughout various blockchains. One can employ these feeds to determine which coins have the most volume. In addition, you can use blockchain data feeds to track crypto whales’ investments.

Crowdsourced Data Feeds

All the remaining feeds fall under crowdsourced data feeds. These feeds help users contribute information that was previously unavailable to the public.

How to Use Sentiment Tool

This platform does not rely entirely on pricing data because the data is prone to manipulation. Its developers have added more features that track various types of data. Let’s take a glance at how these features work when combined with a few trading strategies.

Spotting Tops and Exit Opportunities

One strategy of using this platform is spotting tops and exit opportunities.

There are extreme spikes in cryptocurrency social volumes during a rally, especially for the mid and low-cap coins. These coins usually attract mainstream crypto attention during break-outs, meaning the increased social chatter is pump-related.

During this “hype period,” it is risky for a trader to enter a new position or exit an existing one. Anyone can use SAN tokens in subscribing to SANbase alerts and receive signals whenever a coin they are interested in surges. 

Spot Bottoms and Entry Opportunities

The Santiment team announced it would build a depository of bottom indicators and entry point signals. According to the developers, the opposite downtrend has proved a potent indicator on many occasions. For instance, this method has been very effective in the past for Bitcoin and Ethereum.

Identifying and Monitoring Volatility Makers

Investors should not rely only on price movements; there are other techniques they can use. One of these techniques is identifying and monitoring volatility makers in the crypto space. Santiment tool’s Social indicators alert investors of significant behavioral shifts or reversal trends among crypto market participants.

Studying and Contextualizing Market Activity

Not only does the Santiment platform inform traders, but it also helps them foresee entry and exit points. Additionally, the tool can help you trade market anomalies.

Many Sentiment tool metrics and indicators allow the use of deep analysis. Therefore, any trader interested in understanding the crypto market behavior, crowd sentiment, or network activity Santiment platform has them covered.

Pros and Cons of Santiment Tool

Just like any other tool out there, the Santiment platform has its advantages and disadvantages. Some of the pros of this excellent tool include the reliability and accuracy of its data. Furthermore, this strategy offers a wide variety of charts and has competitive pricing. 

Surprisingly, the technique has received some criticism, but it seems clear of shortcomings so far.

Conclusion

This technique is a few reliable trading strategies that can accurately gauge market sentiments in the crypto-verse. As seen above, Santiment is an excellent platform in trading cryptocurrency since experts keenly review its data. Additionally, it does not rely only on market sentiments. 

A remarkable aspect about the Santiment team is that they have the best alternatives for this platform. These alternatives include LunarCrush, Messari, and Coin360.

This review has insightful information on how to move around this excellent trading technique when conducting crypto-trading. Besides, this strategy has recorded zero criticism so far.

It is, therefore, safe to recommend the Santiment trading technique to any crypto trader out there regardless of whether they are a novice or experienced.

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.