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Sentiment analysis gauges market mood by analyzing social media, news, and forum discussions. Positive sentiment often correlates with bullish trends, while negative sentiment can signal potential downturns. By monitoring key influencers, hashtags, and keywords, investors can spot emerging trends early. Sentiment analysis can also highlight overhyped projects, helping investors avoid potential bubbles. Combining sentiment data with technical and fundamental analysis offers a more comprehensive approach, allowing traders to make more informed decisions and time their entries and exits effectively.
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