Data shows various cryptocurrencies like XRP and Solana are currently witnessing bearish majority sentiment on social media platforms.
XRP, SOL, And Other Assets Are Sharing A Red Mentality Currently
According to data from the analytics firm Santiment, a notable bearish sentiment has emerged among cryptocurrency traders during the past week. The relevant indicator is the “Weighted Sentiment,” based on two other metrics: the Sentiment Balance and Social Volume.
The Sentiment Balance keeps track of the net sentiment present among users on the major social media platforms. The metric calculates this score by reviewing social media posts and applying a machine-learning model to filter for positive and negative sentiments.
Once the indicator has found the scores for these bullish and bearish sentiments, it takes their difference to give the average or net sentiment present among the traders.
The other relevance metric here, the Social Volume, tells us about the amount of discussion related to any topic or term on social media platforms.
The Weighted Sentiment takes the Sentiment Balance and then weighs it against this Social Volume. This means that the indicator’s value only spikes (in either direction) when not only is there some notable imbalance present in the market (that is, the net sentiment has a significant value), but the volume of social media discussion about these sentiments is also high.
This fact makes the Weighted Sentiment more reliable than the Sentiment Balance, as it can provide a better picture of the trend among the traders as a whole (since the Social Volume would only spike when there are many users involved in discussions).
Now, here is a chart that shows the trend in the Weighted Sentiment for six different cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), BNB (BNB), XRP (XRP), Cardano (ADA), and Solana (SOL).
As displayed in the above graph, these assets have had a negative Weighted Sentiment recently, suggesting that bearish sentiment has dominated social media users. More specifically, the indicator is around -0.36 for XRP, while it’s about -0.64 for Solana.
Historically, cryptocurrency markets have been more likely to move in the direction opposite to what the crowd is expecting. As such, price rebounds become more probable the more negative the sentiment gets, while tops can occur when the traders share a highly bullish mentality.
Followers of contrarian investing exploit this to time their buying and selling moves. Warren Buffet’s famous quote sums up this idea, “be fearful when others are greedy, and greedy when others are fearful.”
Given the red sentiment XRP and others are witnessing, a contrarian trader might think it is the right time to buy into these cryptocurrencies.
XRP had attempted recovery earlier, but the move appears to have failed as the asset has returned under the $0.50 level.