I almost never write about crypto. Crypto is still wild, and it's going to be till/if there's mass adoption and maturation. Over the years, I have observed one rule about sentiment which always seems to holds true. Do note this is about long-term macro trends for Bitcoin, and now Ethereum. Everything else is speculative with negligible usage and much more irrational and unpredictable still.
When you're approaching a top or bottom, people overestimate how far things will go.
When in the middle, people will underestimate how far up things can go, or how far down it can fall.
The last few days have added further points of evidence to this rule. I have no idea why it happens every single time, but people continue to be highly irrational, very few ever seem to learn.
In a nutshell, when approaching a bottom, people will start calling for crazy low prices "BTC is going to $1K". When approaching a top, same, in the other direction. E.g. "BTC is going to $50K right" after hitting $20K. When hovering in the middle after brutal bear or euphoric bull markets, people underestimate volatility in either direction. E.g. "No way BTC will hit $10K" in 2016, or "no way BTC goes under $6k" in 2018. Right now, it is "no way BTC will hit $100K".
If you're unsure, HODL. Be humble, don't try to out-think the market - you're not that smart. When people start calling for outrageous prices after crazy price pumps, sell. Likewise, when people start calling for crazy low prices after a big dump, buy.
I will always remember some top witnesses were calling for SBD to reach $100 in 2018, that was my sell signal to power down and GTFO Steem.
Note, that short-term, there will always be unpredictable volatility, but gauging sentiment may or may not help you identify local tops or bottoms. I'm not a trader, but I know many top traders study sentiment too.
Finally, I would highly recommend Santiment as a valuable resource to examine sentiment. They have a whole slew of analysis that can help both the short-term trader and the long-term holder, though more useful for long-term macro trends. Crypto Fear and Greed Index is another nice, simple, at-a-glance metric. You can see from their history that it has been remarkably accurate in finding tops and bottoms, more evidence that sentiment and future price are at least somewhat (inversely) correlated. You can also see for yourself by typing in "$btc" and such into social media search, browsing crypto-related subreddits etc. But do understand that each network seems to have their own peculiarities. E.g. Twitter is notoriously more polarized than Reddit.
Finally, there will always be black swan events like the COVID-19 induced Black Thursday crash. Be prepared for those irrespective of sentiment.