2023-7-10 16:00 |
Data shows FUD related to XRP may be spreading on social media platforms right now, a sign that could potentially help the price reverse.
XRP Social Dominance Has Spiked While The Price Has Been DecliningAccording to data from the on-chain analytics firm Santiment, discussions around XRP have surged during the past day. The relevant indicator here is the “social volume,” which measures the total amount of unique social media text documents that are making mentions of a given cryptocurrency.
The social media text documents here refer to a collection of posts, threads, and other forms of text-based data sourced from major platforms like Twitter, Reddit, Telegram, and 4chan.
Since the metric only counts the “unique” number of such documents, it means that individual posts have the same weightage, regardless of how many times they mention the term (obviously, they will only be counted at all if they have at least one mention).
This restriction has the benefit that a few posts with a large number of mentions of the asset can’t skew the social volume on their own. Thus, the indicator can provide us hints about the degree of discussion that a coin is receiving from the average social media users.
Now, here is a chart that shows the trend in the XRP social volume over the past month:
As displayed in the above graph, the XRP social volume has registered some high values during the past day or so. This would suggest that discussions around the cryptocurrency have become elevated in this period.
In the chart, data for another indicator, “social dominance,” is also shown. This metric tells us what percentage of the combined social volume of the top 100 cryptocurrencies (by market cap) is being contributed by any individual coin.
From the graph, it’s visible that the XRP social dominance has also observed a large spike recently. Naturally, this trend would suggest that the relative share of discussions on social media platforms related to this asset has gone up.
The implication here is that the latest social volume increase isn’t due to a general uplift in talks related to the cryptocurrency sector, but rather due to an increased interest in XRP specifically (if it was otherwise, the social dominance wouldn’t have changed too much even after the rise in the social volume).
Since this high focus on the asset has come as the price has been declining, it would appear likely that these discussions are occurring due to the investors feeling fearful.
Historically, markets have tended to move opposite to what the crowd is expecting, with the probability of such a reverse move going up as the investors assume a stronger opinion. So as a high amount of FUD is potentially going around among the XRP traders right now, the price may be able to benefit from this and experience a rebound.
XRP PriceAt the time of writing, XRP is trading around $0.47, down 2% in the last week.
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