Data shows social media users have been showing a negative sentiment towards XRP, Dogecoin, and Shiba Inu after their plunges in the past day.
FUD Has Engulfed Traders Towards These Altcoins After The Latest Crash
According to data from the analytics firm , the sentiment around XRP (XRP), Dogecoin (DOGE), and Shiba Inu (SHIB) has seen a significant drop recently.
The indicator of interest here is the “Weighted Sentiment,” which derives its value from two other metrics: Sentiment Balance and Social Volume. The first of these, the Sentiment Balance, goes through posts/threads/messages related to a specific cryptocurrency on the major social media platforms and puts them through a machine-learning model.
This model is able to identify and separate between 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 keeps track of the degree of discussion that a given asset is receiving on social media. The metric’s value represents the unique number of posts that are making at least one mention of the coin.
While the Sentiment Balance on its own does tell us about what the majority sentiment on social media currently is, it doesn’t quite contain information about how many users actually share this sentiment.
Activity on these platforms can fluctuate and sometimes only a few posts around the given cryptocurrency may pop up. Even if all of these posts are bullish, it’s hard to say whether they represent what the entirety of the market thinks.
The Weighted Sentiment remedies this issue by taking the Sentiment Balance and weighing it against the Social Volume. With this adjustment, the indicator only reflects an overwhelming dominance in either direction when not only does the net sentiment have a high magnitude, but also a large amount of posts are circulating around the asset.
Now, here is a chart that shows the recent trend in this indicator for three altcoins: XRP, DOGE, and SHIB.
As displayed in the above graph, the Weighted Sentiment has recently plunged into the negative territory for all three of XRP, Dogecoin, and Shiba Inu. This decline in the indicator has come as the prices of these assets have gone through a drawdown.
Naturally, these negative values imply the traders on social media have become bearish towards these assets. This FUD, however, can actually turn out to be a boon for the coins.
Historically, cryptocurrencies have tended to move contrary to the expectations of the majority. As such, with the Weighted Sentiment at negative levels, XRP and others could be close to hitting a bottom.
“Patient traders who have been waiting for the crowd to give up on these large cap altcoins may finally have their buy opportunity with FOMO at a 2024 low,” notes Santiment.
XRP Price
XRP has seen its price drop to $0.49 after witnessing a plunge of 6% over the past couple of weeks.