Definition ∞ Market sentiment analysis involves evaluating the overall attitude or feeling of investors and traders towards a particular asset or the market as a whole. This analysis attempts to gauge whether participants are predominantly bullish, expecting price increases, or bearish, expecting price declines. It often incorporates data from social media, news headlines, and trading indicators to assess collective psychological disposition.
Context ∞ Cryptocurrency news frequently employs market sentiment analysis to explain price movements and forecast future trends, often referencing metrics like the Crypto Fear & Greed Index or social media mentions. Understanding prevailing market sentiment provides context for sudden price volatility or sustained directional movements, helping readers grasp the emotional and psychological forces influencing digital asset valuations. Reports often contrast fundamental analysis with sentiment-driven market behavior.
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