• Twitter can be used by traders to forecast altcoin price movements

  • When cryptocurrency traders win big, they frequently take to Twitter to share their joy. They tend to do the same when sharing heartbreaking stories about being wrecked, discussing promising new assets, or sharing insight and predictions on which projects will be the next big thing. These waves of social attention can sometimes even create positive feedback loops, causing the prices of the tokens that command the chatter to skyrocket.

    The number of tweets mentioning a specific asset can indicate a variety of things. This month, the five tokens with the highest month-to-month increases in daily tweet volume — Loopring’s LRC, NuCypher’s NU, Enjin Coin (ENJ), ANKR, and The Sandbox’s (SAND) — also had some of the highest monthly gains. This is not surprising, as assets that see large rallies tend to attract the attention of the Twitter crowd.

    What is remarkable, however, is that in all five cases, the record-breaking tweet volume peaks occurred prior to, rather than after, monthly price highs. In other words, the massive Twitter conversations surrounding these coins predicted price action rather than reacting to it. How could traders detect the early signs of this extraordinary social activity?

    A shout-out from the audience

    Tweet volume is one of several metrics used to calculate the VORTECSTM Score, an algorithmic indicator that compares past market and social activity patterns around a digital asset with years of historical data performance to determine how bullish the coin’s outlook is.

    A look at raw Twitter data would suffice in the case of the month’s top Twitter darlings, as all of these coins appeared on the Unusual Twitter Volume panel as their tweet volume peaked.

    LRC/USD: A 744.44 percent increase in tweet volume, followed by a monthly price change of +350.79 percent.

    One of the reasons for LRC’s meteoric rise this month is that the layer-two protocol continues to offer lower transaction fees than its competitors, which comes in handy given the Ethereum network’s exorbitant gas fees.

    On Nov. 3 (the red circle in the chart), the volume of daily tweets mentioning the project surpassed the monthly average by more than 740 percent, as the asset approached its local price peak of $1.54. Following a brief correction fueled by the influx of social attention, LRC continued to rise, eventually surpassing $2 six days later.

    NU/USD: A 598.87% increase in tweet volume resulted in a +179.18% monthly price change.

    Nobody knows where NU’s 10x-plus pump on Oct. 15 came from, but it saw the coin rise from around $0.30 to above $3 in a matter of hours. Some Twitter users attributed the increase to its listing on the South Korean exchange Upbit, but it’s possible that something else was at work. People were most likely just trying to figure out what was going on.

    In any case, the Unusual Twitter Volume indicator started flashing just two hours into the rally, with the highest rate appearing just before the price high of $3.17. Surprisingly, social excitement around NU persisted for some time after the hard price correction, beginning to fade only a day after the price had fallen back to around $1.20.

    ENJ/USD: A 354.32% increase in tweet volume accompanied a +90.35% monthly price change.

    Enjin Coin became one of the beneficiaries of the metaverse token frenzy sparked by Facebook’s rebranding to Meta at the end of October.

    The Twitter discussion about blockchain gaming platform Enjin peaked on Oct. 31 at $2.51, as ENJ was cooling off after a parabolic rally. The onslaught of Twitter mentions foreshadowed the coin’s next leg of action, which took it to the next high of $3.45.

    ANKR/USD: A 329.08 percent increase in tweet volume was accompanied by a +39.51 percent monthly price change.

    ANKR had a massive performance around the same time that metaverse assets skyrocketed, rising from $0.081 on October 28 to $0.139 a week later.

    As the token’s price briefly plateaued for a breather in the midst of the hike, the Twitter numbers exploded, reaching 2,400 daily mentions. Following that, the token’s price jumped one more time to the monthly high set on November 3.

    SAND/USD: An increase in tweet volume of 328.12 percent was followed by a monthly price change of +222.12 percent.

    The Sandbox was another metaverse marvel whose token price skyrocketed in the aftermath of the Facebook/Meta news.

    SAND’s positive social outlook was evident when its daily tweet volume more than tripled compared to the month-to-month average, reaching a record high of over 2,600 15 hours before the stock reached a high of $3.38.

    To be sure, an unusually high volume of tweets mentioning a specific asset is not a guarantee of an impending price increase. To make an informed decision, traders should investigate the actual context of what is going on around the token. However, being alerted to massive spikes in interest in specific assets can be extremely helpful in focusing one’s analysis on the most likely candidates for a continued rally.

    What's your reaction?