In a market that has seen a massive amount of investor interest in cryptocurrencies over the past few months, one might expect the social media platforms that have built up these communities to see their value soar. While Twitter and Facebook have certainly had their moments, it has become increasingly clear that the social media platforms that have the most active cryptocurrency communities are Reddit, Steemit, and Telegram.
Data has been scarce on how the social and decentralized financial technologies are performing, until now. As we have mentioned before, the price of decentralized or DeFi (DeFi=Decentralized Finance) token assets has been suffering lately, and some of the larger projects have been trading at valuation multiples below their ICO price. Last week, a study by the research firm, Eurekahedge, showed that US users are increasingly spending less time on social media, and instead, are spending more time on apps that support DeFi and NFTs.
In the investment world it is often said that trends are your friends. This sentence suggests that following the prevailing market trend will lead to positive results in most cases.Common indicators used to identify market trends include: technical analysis, which looks at price charts to identify opportunities; fundamental analysis, which looks at the economic and technological factors behind a project; and social media indicators, which help investors feel the pulse of the general public.
One of the most popular metrics that crypto traders use to spot emerging patterns is Google Trends, a product that analyzes the popularity of searches through the Google search engine. Google Trends allows users to view data in simple line graphs, which also include a breakdown by geographic area.
The Google Trends chart for bitcoin searches shows several spikes in search activity over the past year, including early January, late February, mid-April and again in mid-May.
Interest in searching for polygonover time. Source: Google Trends
While many analysts and trend watchers prefer technical and fundamental analysis to keep their finger on the pulse of emerging trends, it’s important to remember that no cryptocurrency project is valuable without the people involved in the network.
This means that valuable lessons can always be learned from the analysis of the information and announcements that capture people’s attention and captivate the audience.
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