2023-6-1 16:45 |
Data shows the hype around XRP has spiked as the asset has registered a 12% gain during the past week, something that may lead to a top.
XRP Social Dominance Has Surged To High Values RecentlyAccording to data from the on-chain analytics firm Santiment, crowd optimism around XRP has shot up recently. A relevant indicator here is the “social volume,” which measures the total number of unique social media text documents that are currently making mentions of a given coin or topic.
These “social media text documents” refer to text-based posts or threads sourced from various popular social media platforms like Reddit, Twitter, and Telegram.
Since this metric only measures the unique number of such documents, it means that even if a post mentions the cryptocurrency in question several times, its share of the social volume still only remains one unit.
Because of this restriction, the indicator can provide a reliable picture of whether the users in the wider social media platforms are discussing the asset or not right now.
Another indicator, called “social dominance,” is also of interest here; this metric compares the social media of the cryptocurrency (which would be XRP in the current case), to that of the combined social volume of the top 100 assets by market cap in the sector.
Now, here is a chart that shows the trend in the XRP social volume, as well as the social dominance, over the last year:
As displayed in the above graph, both the XRP social volume and the social dominance have spiked to high levels recently. At the peak of this surge, the latter indicator had hit a value of 16.2%, which means that 16.2% of all discussions on social media websites related to the top 100 assets were about the token.
These elevations in the social metrics of the cryptocurrency have come as the price has outperformed all the largest coins in the market after registering a gain of more than 12% during the past week.
Generally, whenever the social volume rises along with a price rise, it means that the investors are becoming more optimistic about the near-term outcome of the asset.
While such positive attention can sometimes help fuel the price rise further, it’s also true that too much of it can actually have the opposite effect on the cryptocurrency.
Historically, digital asset markets have tended to move against the expectations of the opinion of the crowd, so a large amount of hype and euphoria can offer the perfect recipe for the formation of a top to take place.
The latest spike in the social dominance of XRP doesn’t necessarily have to be bearish, but it’s still something that can increase the probability of a top taking place.
Though, there has also been a bullish sign for the asset recently, as the number of active addresses has rapidly increased. Such a trend is usually a sign that a large number of users are participating in the blockchain, which is something that can help the price rise to be more sustainable.
XRP PriceAt the time of writing, XRP is trading around $0.5047, up 12% in the last week.
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