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- According to a Santiment analyst, digital asset trading is a game of probability rather than science.
- The analyst noted that a piece of fundamental news could demystify already set-up technical metrics.
- Santiment’s analyst presented Age Consumed, Binance Funding Rate, Weighted Sentiment, MVRV Ratio, and Trending Tokens as the top five metrics.
According to a presenter on Santiment Network’s YouTube channel, digital asset trading is a game of probability rather than science. He noted that a piece of fundamental news could demystify already set-up metrics when using technical analysis. However, the presenter explained some metrics traders can use to analyze the markets, assuming fundamental factors remain constant.
The first metric that the Santiment channel’s host explained in a recently uploaded video is Age Consumed. According to him, it is an indicator that looks at the amount of coins moved at any given time. He explained that Age Consumed is calculated by multiplying the amount of coins moved by how long they were sitting in wallets.
As a trading indicator, the presenter showed how to use spikes in Age Consumed to identify a local top in a rallying market. He noted that the indicator can also work as a bottom signal but is not as reliable as when used to determine the end of a rally.
Another metric from the presenter is the Binance Funding Rate. He described it as a counter-indicator that reveals the betting pattern of traders on a given trading pair. He summarized this indicator as the ratio of longs vs. shorts on any digital asset. It is a metric that can signal the top or bottom of a trend, depending on the market direction.
The next metric introduced is the Weighted Sentiment. According to the presenter, it is the result of multiplying the number of discussions related to a given asset by the ratio between positive sentiments, comments, and native sentiment comments all over social media. He showed how it can be a reversal indicator to calculate when to enter or exit the market for any crypto asset.
The Santiment presenter introduced the MVRV Ratio as one of the foremost metrics to help traders make accurate decisions. He described the metric as the average trading returns of active addresses over a stipulated period. According to him, the MVRV Ratio is a contrarian metric where the high signals indicate the formation of a selling market, while the low signals show that a rally is about to begin.
Finally, the Santiment presenter introduced the Trending Tokens metric found on the platform’s social trends dashboard. He explained how a backtest of the recently created metric showed that shorting assets among the top 3 trending tokens delivered profitable returns. Hence, the metric can also predict when a significant rally is about to end or at the beginning of a price reversal.
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