Data shows that social media users have shown negative sentiment towards XRP, Dogecoin and Shiba Inu following their drops the previous day.
FUD Engaged Traders Toward These Altcoins After Latest Crash
According to data from the analysis company Sanctionsentiment around XRP (XRP), Dogecoin (DOGE), and Shiba Inu (SHIB) has seen a significant drop recently.
The indicator of interest here is the “Thoughtful feeling”, which derives its value from two other metrics: Sentiment Balance and Social Volume. The first of these, Sentiment Balance, goes through posts/topics/messages related to a specific cryptocurrency on major social media platforms and puts them through a machine learning model.
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This model is able to identify and separate negative and positive posts. The Sentiment Balance then takes the difference of these posts to find a net sentiment for the market.
The other relevant indicator here, the Social Volume, basically monitors the degree of discussion that a certain asset is receiving on social media. The metric value represents the unique number of posts that make at least one mention of the currency.
While the Sentiment Balance alone tells us what the majority are feeling on social media today, it does not contain information about how many users actually share that sentiment.
Activity on these platforms can vary, and sometimes only a few posts about a particular cryptocurrency may appear. Even though all of these publications are optimistic, it is difficult to say whether they represent what the entire market thinks.
Weighted Sentiment solves this problem by taking the Sentiment Balance and weighing it against Social Volume. With this adjustment, the indicator only reflects an overwhelming predominance in either direction when not only the net sentiment has a high magnitude, but also when a large amount of publications circulate around the asset.
Now, here is a chart showing the recent trend of this indicator for three altcoins: XRP, DOGE and SHIB.
As displayed in the chart above, weighted sentiment has recently dipped into negative territory for all three: XRP, Dogecoin, and Shiba Inu. This decline in the indicator occurred at a time when the prices of these assets fell.
Naturally, these negative values imply that traders on social media have become bearish on these assets. That FUDhowever, it could actually be a boon for currencies.
Historically, cryptocurrencies tend to move contrary to most expectations. As such, with sentiment weighted at negative levels, XRP and others may be close to bottoming out.
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“Patient traders who have been waiting for the crowd to give up on these large-cap altcoins may finally get their FOMO buying opportunity in 2024 at the earliest,” notes Santiment.
XRP Price
XRP price fell to $0.49 after witnessing a 6% drop in recent weeks.
Featured image from Shutterstock.com, Santiment.net, chart from TradingView.com