On-chain analytics firm Santiment has revealed the potential reason behind the corrections that Dogecoin and Apecoin have faced recently.
Dogecoin and Apecoin are among the Memecoins that have fallen victim to FOMO recently
As explained by Santiment in a new publish on X, the relationship between positive sentiment and negative sentiment has seen a recent increase for Dogecoin and other memecoins.
The “Ratio of positive sentiment versus negative sentiment” here refers to an indicator that tells us whether major social media platforms are biased towards positive or negative comments at the moment.
This indicator uses a machine learning model developed by the analytics company to separate comments relating to negative and positive sentiment.
When the metric value is greater than zero, it means that the total number of positive posts/topics/messages exceeds the number of negative ones. On the other hand, the indicator being below this limit suggests the dominance of bearish sentiment on social media.
Now, here is the chart shared by Santiment that shows the trend of this indicator for four assets over the last few months:
As displayed in the chart above, Dogecoin and Apecoin have witnessed spikes in the positive sentiment versus negative sentiment ratio recently, implying that a large amount of positive comments related to these coins have been made on social media.
Interestingly, as the analytics firm pointed out, these spikes coincided with spikes in DOGE and APE prices. The other two memecoins listed on the chart, GIGA and GOAT, also witnessed a similar pattern, although their tops emerged before the first two.
While positive sentiment may suggest belief in the market, a large portion of it may be an indication of excessive hype, something that has historically led to tops not just for memecoins, but for cryptocurrencies in general.
“Prices typically always go in the opposite direction to the crowd’s expectations, and when the crowd goes to the extreme, whether on the bullish side or the bearish side, it becomes highly predictable to buy or sell,” explains Santiment.
Given the timing of recent positive spikes in the indicator, it seems possible that the Fear of missing out (FOMO) that developed among investors was the reason behind the corrections that Dogecoin and others faced.
The relationship between positive sentiment and negative sentiment can now be observed in the coming days as any cooling in its value could pave the way for bullish momentum to reset for those coins.
DOGE Price
Dogecoin had approached the $0.150 level a few days ago, but with the correction that has followed since then, its price has returned to the $0.136 mark.