Crypto fans love to defend their favorite assets. Just look at the XRP army and the LINK Marines. Does the hype on Twitter match the high trading activity? A few altcoins in 2020 showed mixed results. Using information from The Tie, a crypto data platform, Cointelegraph looked at the Hype-To-Activity ratios of assets that matched their prices.
“Hype-to-Activity Ratio measures the number of tweets a given coin has per every $ 1 million in that coin’s reported trading volume,” Joshua Frank, CEO and co-founder of The Tie, told Cointelegraph, adding:
“On August 15, 2019, the average Hype-To-Activity Ratio in cryptocurrencies was 1.02. In other words, cryptocurrencies receive an average of 1.02 tweets per $ 1 million of reported trading volume. “
Twitter often hosts countless discussions about different items at any given time. Announcements and other events also play a role in the comparison. Sometimes trading activity and hype travel together, while other times the two become unbalanced.
“High hype-to-activity ratios may indicate that a particular cryptocurrency is overhyped in social conversations in proportion to the amount of trading activity it has,” explained Frank. “It is a good measure of identifying outliers or tracking the number of social conversations a particular currency has in relation to volume of trade over time.”
The tie executed an in-depth on-site study in 2019. Findings ranged from the relatively obvious – for example, Tether (USDT) is traded far more than talked about – to big outliers like Electroneum (ETN), whose off-the-chart reading led The Tie to suspect foul play.
Crypto asset prices performed well in 2020, with Bitcoin (BTC) being in charge, its highest prize ever broken. Ether (ETH), Ripple’s XRP and Chainlink’s LINK also had respectable years, including their share of the promotion on Twitter, but did their prices live up to the hype?
The crypto industry’s second-largest asset by market capitalization, ETH, gave the public many topics of conversation in 2020. Advances on Ethereum 2.0, the blockchain’s long-awaited transition to a proof-of-stake mining algorithm, took longer than expected. On November 24 Eth2 has passed the requirements needed for a Beacon Chain launch on December 1, completing Phase 0. On December 1 Eth2 has gone live.
Twitter hype for the year fluctuated noticeably against ETH’s price. The hype converged towards its price in early 2020.
The Crash caused by COVID-19 in March delivered a powerful external shock to the markets, with prices plunging even while the hype remained stable. Between late April and early June, the hype correlated essentially in equal measure with price action.
During June and July, as the “Summer of DeFi” unfolded, ETH began to rise in popularity on Twitter. The hype-to-activity ratio went from 0.395 to 1.019 tweets per $ 1 million trade volume between June 1 and July 20, while the price of ETH remained flat, trading roughly between $ 221 and $ 247. A vigorous rally towards the end of July corrected the difference, with ETH hitting $ 383 on August 1 while maintaining a hype score of 1,003. On the other hand, the hype stopped in November and December, even as the price started approaching the highs of the 2017 rally.
During that same period of June and July, the reported trading volume of ETH declined significantly, while tweets increased. A trade flow of $ 13.86 billion matched the hype of 0.406 tweets per million in volume on June 2. Volume fell to $ 5.59 billion on July 20, but tweets per million in volume more than doubled to 1.019 on the same day.
In the past days, The price of ETH has gone up, but the hype has not followed with the same exuberance.
Crypto’s third largest asset by market capitalization, XRP didn’t have a major news event in the same way as Ethereum, though the asset’s loyal following, known as the XRP military, nonetheless sparked a steady stream of hype.
In January, comments emerged from Ripple’s CEO about a possible IPO for the company. The headlines throughout the year were also a co-founder sale of part of its XRP stock, developments in a lawsuit claim XRP was an unregistered security, and build a link between the Ethereum and XRP networks, too concerns an upcoming airdrop.
As for Twitter hype and pricing for the year, XRP tweet flow by volume is held at high values for most of the year. As with ETH, the price of XRP fell much more than its Twitter activity in March during the price drop caused by COVID-19.
Similar to ETH, between May 11 and July 21, XRP’s hype ratio increased, while the price did not track in the same way until early August, when it caught up significantly. However, XRP generally had a much higher hype ratio than ETH during that period, with the hype ranging from 1,414 to 2,754 tweets per $ 1 million in trading volume.
The hype started to go down on September 20 and traveled from a ratio of 2.249 to 0.59 on December 2. Meanwhile, the price traded sideways between $ 0.22 and $ 0.25 from September 20 to November 2. The price shot up through November, but hit $ 0.69 against a declining hype ratio.
The United States Securities and Exchange Commission went after Ripple and XRP on Dec. 22, claiming the company had an unrecorded securities sale and claiming that XRP remains a security even years after its launch. XRP dramatically decreased in price in the days after the start of the action. Have a number of exchanges as well XRP trading removed. XRPs price plummeted to meet its Twitter activity, which has already fallen short of its price before the regulatory news.
LINK has amassed a following similar to that of XRP known as the Link Marines – the members of which Barstool Sports founder Dave Portnoy called fraudsters during his brief foray into the crypto space.
LINK, the sixth largest cryptocurrency in the industry, performed well in price all year round, to post a record price of about $ 20 in August, based on TradingView data. Between its low in March and its all-time high in August, LINK rose from about $ 1.50 to $ 20.
LINK showed an exorbitantly high hype ratio in early 2020, with a score of 5.128 on Jan. 25, while the price was trading well below $ 2.46. The hype train then crashed, dropping all the way to a score of 2,099 on April 11, hitting the price of $ 3.25 per LINK token.
However, the asset’s Twitter action did not stay close to its price for long, rebounding right away from there in a strong upward trend, reaching a hype rating of 4.456 on July 6. However, LINK remained pretty calm in terms of upward price action during all of that. Twitter commotion ranging from $ 3.17 to $ 5.30 from April 11 to July 6. As the token caught up to Twitter’s chatter to some degree, the token started an upward trend that would eventually bring the assets to $ 20.
In fact, during the grim rally, hype growth turned negative far earlier than the nearly $ 20 record high. The hype plummeted to 1,199 on October 9. The price dropped significantly from $ 20 after the historic high, but remained at a significant level compared to the collapse of its hype. LINK registered significantly more attention than ETH on Twitter in 2020, even reaching noticeably higher than XRP’s during the year.
The Twitter-based hype for ETH, XRP and LINK has all been either down or down for the last few months of 2020. Such declines and stagnation could possibly be the result of Bitcoin’s dramatic rise at the time. BTC fell into the spotlight during the last three months of 2020. Crypto’s largest asset rose from $ 10,500 to $ 19,900 during that period, pushing certain altcoins up in price, but not necessarily in the spotlight.
A number of decentralized financial assets, or DeFi assets, also posted dramatic price action during their early years of existence, on the DeFi boom of 2020.
Yearn.finance, with its YFI asset, burst into the crypto scene in the second half of 2020, rising from $ 900 to more than $ 40,000 per token.
While previous months showed no available hype ratings, November and December revealed greater hype than price, peaking at 0.92 – particularly below the levels seen in XRP and LINK – at a price of $ 25,708.
SushiSwap, a DeFi protocol, and its associated SUSHI assets caused a lot of drama in September. Sushi’s Leader, a pseudonym known as ‘Chef Nomi’, ran off with part of the project’s development fund, who temporarily handed the protocol to Sam Bankman-Fried, CEO of the FTX exchange. Chef Nomi later returned the money.
During the second half of October and the first half of November, the SUSHI hype surpassed the price significantly, peaking at 1.89 on the hype scale while trading at a price of $ 0.71 – a similar hype to XRP, but lower than LINK.
Looking back at 2020 and Hype-To-Activity Ratio in line with asset prices shows that Twitter activity is still prevalent in the crypto industry. What will the 2021 data show in the coming year like Bitcoin’s bull market continues?