Cryptocurrency enthusiasts tend to defend their favorite crypto assets. Just look at the supporters of XRP and LINK. Does the hype on Twitter match the high trading activity? Some altcoins performed mixed in 2020. Cointelegraph analyzed the information of the cryptocurrency data platform The Tie and studied the ratio of speculation activity between assets and prices.
Joshua Frank, CEO and co-founder of The Tie, told Cointelegraph: “The hype activity ratio indicator measures the number of tweets per 1 million U.S. dollars in transactions per currency.” He added:
“As of August 15, 2019, the average hype activity ratio for cryptocurrencies was 1.02. In other words, the average number of tweets per $1 million in cryptocurrency transactions was 1.02.”
At any given time, there are often many discussions on various assets on Twitter, as well as announcements and other activities. Sometimes, trading activity and hype go hand in hand, while other times, the two lose their balance.
Frank explained: “The high rate of hype activity may indicate that a certain cryptocurrency is overhyped by social media relative to its trading volume.” “This is a good indicator that can be used to identify outliers or track certain generations. The hype of the currency relative to its trading volume over a period of time.”
In 2019, The Tie conducted an in-depth study of this situation. The Tie’s research findings cover from some relatively normal situations, such as Tether (USDT) with more transactions than discussions about it, to some abnormal situations, such as Electroneum (ETN), which has a significantly higher rate of hype activity, resulting in The Tie suspected that it used improper means.
The price of crypto assets performed well in 2020, with Bitcoin (BTC) performing the best, breaking the all-time high price in 2017. In recent years, ETH, XRP and LINK have also performed well, and there have been more promotions about them on Twitter, but are their prices consistent with their hype?
ETH
In 2020, ETH, the second largest cryptocurrency in the crypto industry, provides a lot of discussion topics for the public. The progress of Ethereum 2.0 and the transformation of the Ethereum blockchain to the proof-of-stake mining algorithm are highly anticipated, but the completion time is longer than expected. On November 24, 2020, ETH2.0 met the requirements for the launch of the beacon chain on December 1, completed phase 0, and went live on December 1.
In 2020, Twitter’s hype on ETH has fluctuated significantly relative to its price. At the beginning of 2020, the ETH hype has moved closer to the price.
The outbreak of the new crown pneumonia caused the market crash in March, which brought a strong external shock to the market. Although the hype remained stable, the price of cryptocurrencies was still plummeting. From the end of April to the beginning of June, the level of speculation was basically the same as the price trend.
From June to July, as the “DeFi summer boom” unfolded, ETH’s popularity on Twitter began to rise. During the period from June 1st to July 20th, the ratio of ETH’s hype activity has risen from 0.395 to 1.019. During this period, the price of ETH remained stable, and trading activities were conducted within the range of close to $221 to $247. At the end of July, the strong increase in the price of ETH changed this disparity. The price of ETH reached $383 on August 1, and its hype activity ratio remained at 1.003. On the other hand, although the price of ETH is close to the 2017 bull market high, its hype also flattened out during November and December.
During the period between June and July, the transaction volume reported by ETH dropped significantly, while the number of tweets increased. On June 2, ETH’s transaction volume reached $13.86 billion, which is in line with its 0.406 hype activity ratio. As of July 20, ETH’s transaction volume had fallen to $5.59 billion, but its number of tweets per 1 million transaction volume more than doubled, and its hype activity ratio reached 1.019 on the same day.
In recent days, the price of ETH has soared, but its hype has not followed the same boom.
XRP
As the third-largest crypto asset by market value, XRP has not seen major news events like Ethereum, despite the constant hype by the loyal fan group known as the “XRP Army Team”.
In January of this year, Ripple’s CEO commented on the company’s possible initial public offering. News reports about XRP throughout the year also include: a co-founder of Ripple sold part of his XRP, the SEC (United States Securities and Exchange Commission) allegations that XRP is an unregistered securities litigation progress, and Flare Networks plans to invest in Ethereum The establishment of a cross-chain bridge between the XRP network and the XRP network will also involve the upcoming SPARK token airdrop.
In terms of XRP’s Twitter hype and price trends in 2020, the ratio of XRP’s hype activity has remained at a high level for most of the time. Similar to ETH, during the price drop caused by the new crown pneumonia, the price drop of XRP far exceeded its Twitter activity.
Similar to ETH, during the period from May 11 to July 21, the ratio of XRP’s hype activity increased, but it was not until the beginning of August that most of the lost ground was recovered, and the price of XRP did not show the same upward trend as ETH. However, the hype activity ratio of XRP during this period was generally much higher than that of ETH, rising from 1.414 to 2.754.
On September 20, the XRP hype activity ratio began to show a downward trend, from 2.249 to 0.59 on December 2. At the same time, from September 20 to November 2, the price of XRP fluctuated sideways between US$0.22 and US$0.25. However, throughout November, the price of XRP soared, reaching $0.69 while the hype activity rate declined.
On December 22, the SEC filed a lawsuit against Ripple, alleging that Ripple sold unregistered securities and alleging that XRP has been classified as securities for many years since its launch. Within a few days after the SEC announced its lawsuit against Ripple, the price of XRP plummeted. Many exchanges have cancelled XRP trading, and the price of XRP has fallen to match its Twitter activity. Before this news was issued, XRP’s Twitter activity had been lagging behind its price.
LINK
LINK also has a support group similar to XRP, known as the “Link Naval Team”. During LINK’s skyrocketing, Barstool Sports founder Dave Portnoy called the members of the “Link Naval Team” scammers.
As a well-known crypto asset in the crypto industry, the price of LINK will perform well in 2020. Data from TradingView shows that LINK reached an all-time high of nearly $20 in August. From the low in March and the all-time high in August, the price of LINK rose from approximately $1.5 to $20.
News reports surrounding LINK in 2020 include: Chainlink announced cooperation with multiple companies, multiple networks announced the integration of Chainlink oracles, and the influx of its doubters.
At the beginning of 2020, LINK showed a fairly high rate of hype activity, reaching 5.128 on January 25, but its price was well below US$2.46. After that, the LINK hype activity ratio dropped all the way to 2.099 on April 11, which was in line with its price of $3.25.
Although LINK’s Twitter activity did not approach its price for a long time, it quickly rebounded with a strong upward trend. As of June 7, its hype activity ratio reached 4.456. However, from April 11th to July 6th, the price of LINK fluctuated between $3.17 and $5.30, which fluctuated fairly flatly during the active Twitter period. The price of LINK then began to rise and eventually rose to $20, catching up with Twitter activity to a certain extent.
During the strong rally, long before the record high of $20, LINK’s hype activity ratio actually showed negative growth. By October 9, the index plummeted all the way to 1.199. The price of LINK has fallen sharply from its historical high of $20, but it remains at a considerable level compared to its hype activity ratio. Compared to ETH, LINK has received more attention on Twitter in 2020, and even significantly more than XRP.
In the last few months of 2020, the Twitter hype of ETH, XRP and LINK has all declined or remained flat. This decline and stagnation may be due to Bitcoin’s sharp surge during that time. BTC was particularly eye-catching in the last three months of 2020, rising from 10,500 US dollars to 19,900 US dollars, which promoted the price increase of certain altcoins, but did not attract much attention.
DeFi
With the help of the decentralized finance (DeFi) boom in 2020, some DeFi assets have also experienced dramatic price fluctuations in the first few years of their existence.
Yearn.finance’s token YFI was launched in the second half of 2020, and its price soared from $900 to over $40,000.
Although there was no hype in the previous months, the level of hype in November and December exceeded its price. At a price level of $25,708, YFI’s hype activity ratio reached a peak of 0.92, but it was significantly lower than that of XRP and LINK. Level.
The DeFi protocol SushiSwap and its token SUSHI had a significant impact in September. The anonymous head of SushiSwap “Chef Nomi” took away part of the project development funds and temporarily transferred control of the agreement to Sam Bankman-Fried, CEO of FTX Exchange. Chef Nomi later returned the funds.
During the second half of October and the first half of November, SUSHI’s hype level far exceeded its price, and its hype activity ratio reached a maximum of 1.89. This index is equivalent to Ripple, but lower than LINK, the price of SUSHI at that time It is $0.71.
Looking back at 2020 and the ratio of hype activities consistent with asset prices, we can see that Twitter hype activities are still prevalent in the crypto industry. If the Bitcoin bull market continues, how will the various data of the crypto industry in 2021 be presented?
