Dogecoin is down about 3% in the last 24 hours after forming a pattern that has often signaled tops in the past.
Dogecoin Social Volume and Sentiment Soared Just Before Decline
According to network analytics company Saint, euphoria has historically led to price highs in cryptocurrencies. An important indicator here is “social volume”, which measures the total number of text documents containing a given search term (in this case, Dogecoin) at least once.
The text documents here include social media posts such as tweets, telegram posts, Reddit posts, and other forum-related text snippets. The key feature of the social volume metric is that it counts these documents not based on how many times they mention the search term, but on whether they do so at least once.
For example, if a tweet mentions Dogecoin once and a Reddit post mentions the memecoin five times, the indicator will still count both documents as 1 document (meaning the total social volume here would be 2).
Now here is a chart that shows the social volume trend for DOGE over the past few months:
Looks like the value of the metric has been high in recent days | Source: Ali on Twitter
As shown in the chart above, the social volume of Dogecoin (Green) has surged over the past couple of days, showing that discussion of the meme coin has been at a fairly high level recently.
The chart also shows data for another indicator called “weighted sentiment,” which first measures the overall market sentiment around a cryptocurrency and then correlates it with social volume.
This metric quantifies sentiment by looking at the previously mentioned social media text documents and checking if users are talking positively or negatively about the meme coin using a machine learning model.
After that, the indicator compares this calculated sentiment with the current social volume of the asset. Simply put, this means that the metric will only show high values when both social volume is high and the overall mood is very positive.
It can be seen from the graph that recently this indicator has also jumped to very high values. In fact, the current level of the indicator is the highest since October last year. This means that many people are not only talking about DOGE right now, but actually mentioning it in a positive light.
Interestingly, back in October, the price of the cryptocurrency was rising, but after both social volume and weighted sentiment reached extremely high levels, Dogecoin peaked and corrected sharply soon after.
While hype can naturally create a bullish wind for a coin, it is also true that too much of it can cause the price to top out and fall instead. “Regardless of your opinion about DOGE, the hype around this asset, in particular, historically heralds market corrections,” Sentiment explains.
After the latest spikes in the two indicators, Dogecoin has already experienced a 3% drawdown after hitting a local high above $0.09. It is currently unclear if this is really the euphoria effect that came to the market with this latest drawdown, but if so, then DOGE could be in a further downtrend.
Doge Price
At the time of writing, Dogecoin is trading around $0.0864, up 5% over the past week.
DOGE has declined during the past day | Source: DOGEUSD on TradingView
Credit : www.newsbtc.com
