What Is the Impact of Social Media Sentiment on Herding Behavior in Crypto?

Social media platforms act as an echo chamber, rapidly amplifying negative sentiment and creating a strong herding effect in the crypto market. Fear, uncertainty, and doubt (FUD) spread instantly, convincing retail traders to sell before they can rationally assess the situation.

The collective, viral nature of the sentiment overrides individual analysis. This rapid dissemination of panic transforms localized selling into a widespread market event much faster than traditional news cycles.