Santiment Market Director: Five key panic words may indicate that the crypto market has bottomed out, and reverse operations have a high success rate

Brian Quinlavin, director of markets at Saniment, said in an Oct. 2 blog post that when five main “fear” words are used frequently on social media, it can help traders determine if the market is overly fearful and if a breakout is likely. “When markets feel low, people often start using specific words more frequently. These fear-mongering keywords, often referred to as ‘FUD’ words, can actually be a sign that things are about to turn positive.” The first word is “crash.” When everyone is talking about a crash, it usually means that prices are plummeting and traders are going into panic mode. Ironically, when the word “crash” is mentioned the most on social media, it’s usually when prices start to recover. The same is true when the words “sell” and “dead” appear on social platforms. Quinlavin said that just like “crash,” traders start using the words “sell” and “dead” frequently, which usually means a recovery is coming, creating “opportunities for the brave.” The fourth panic keyword is "crackdown," referring to regulatory and legal pressures that make traders feel constrained, worried about government actions or the potential outcome of new or ongoing lawsuits. Quinlavin said: "Such concerns can depress prices, but often lead to good buying opportunities, especially when panic appears to be exaggerated." The fifth word is "liquidation," which is a double-edged sword, depending on the direction of the market. Often, investors on social media tend to use the word "liquidation" when celebrating those who shorted the market and suffered losses. Quinlavin said that an increase in short positions "historically has been a great opportunity for new buyers to enter." He concluded that taking a "contrarian action" on social media sentiment "is often" the right decision. (Cointelegraph)