Crypto Twitter is a powerful place. Not only does the online discussion follow the ups and downs of digital assets, but it can also shape price action. Oftentimes, a spike in Twitter attention can anticipate a dramatic increase in an asset’s price. Yet, in other cases, the order can be reversed, or there may be no relationship between price and Twitter chatter at all.
To harness the power of Twitter and use it as a tool for profit generation, crypto traders need two things: The first is the ability to quickly spot spikes in social attention around specific assets, while the second is sound judgment to tell if the anomaly is indeed a harbinger of an impending rally. While there are reliable algorithmic tools that cover the first ingredient — such as Cryptox Markets Pro’s Unusual Twitter Volume indicator — the latter requires instincts and experience.
The following examples of assets that showed the largest week-to-week increase in tweet volume illustrate various scenarios around the relationship between price and Twitter conversation.
Cream Finance: The Iron Bank effect
CREAM, the native token of decentralized finance project Cream Finance, sported the greatest week-to-week tweet volume increase as conversation around the asset grew 543% more extensive. The reason for the popular excitement was the announcement that holders could stake their CREAM to receive the tokens of the upcoming Iron Bank, Cream Finance’s new protocol-to-protocol lending platform.
As visible in the chart, the price hike that began to unfold on Jan. 13 went hand in hand with the intensifying tweetstorm. The discussion peaked on Jan. 14 when 216 tweets referencing CREAM were posted, against a price of around $72. Even as the chatter began to recede, the token continued to add value, breaching $92 on Jan. 15. In this case, the Twitter trend was clearly instructive, as CREAM’s price grew an additional 27% over the two days that followed the tweet volume peak.
SwissBorg: Promo leads to a tweet surge
While the price of SwissBorg Token (CHSB) remained in a rather narrow range between $0.52 and $0.57 throughout last week, there was a 521% increase on Jan. 14 in the volume of tweets that mentioned SwissBorg. What was the reason for the uptick? A Jan. 13 giveaway of whitelist spots for nonfungible token (NFT) mints that required liking and retweeting the original post to enter. Having reached upward of 13,000 retweets, it was a successful publicity move, but it had had little effect on the CHSB token’s price, however.
Decred: Twitter reacts to a price pump
One common scenario is an explosion of Twitter attention in response to a dramatic price hike. A case in point is the price of Decred (DCR) vs. its tweet volume last week. Late on Jan. 14, the coin’s market value shot up from around $60 to $86 in a matter of three and a half hours. Social excitement began building up only after the price peak, culminating in a high of 110 tweets the day after, when the price had already corrected to below $70.
ZKSwap: Price and tweet volume increase together
Early in the week, ZKSwap’s ZKS token saw a modest price increase from $0.27 to $0.29, with the tweet volume peak of 116 posts coming on Jan. 12, ahead of the week’s price high. Although it does not look humongous, this attention spike marked a 370% increase in tweets compared with the week before.
FTX Token: Tweet volume peaks ahead of the price peak
FTX Token (FTT) had a strong week in terms of price movement, steadily climbing from $36.81 on Jan. 10 to $47.02 on Jan. 16. The asset’s spectacular run didn’t go unnoticed by Crypto Twitter, as the volume of conversation ramped up on Jan. 14 and reached its high-water mark the next day with 313 tweets. FTT’s solid performance continued even after tweet volume peaked. In this case, a spike in social attention could have certainly alerted traders to a profit opportunity.
Getting alerted to Twitter anomalies
Those who don’t have time to scroll through their Twitter feed day in and day out can outsource the spotting of sudden spikes in the volume of asset-specific chatter to specialized tools. Markets Pro, Cryptox’s proprietary data intelligence platform, automates the process by showing a dedicated panel on the dashboard with five assets that are seeing an unusually high tweet volume.
Tweet volume is also one of the components of the VORTECS™ Score, a machine learning-powered indicator that compares historic and current market conditions around digital assets to aid crypto traders’ decision-making. The model takes in a host of other indicators — including market outlook, price movement, social sentiment and trading volume — to generate a score that shows whether the present conditions are historically bullish, neutral or bearish for a given coin.
Cryptox is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.
