Price Surges 12% as XRP Hype Spikes, Is This a Top Sign?

The data shows that the hype around XRP has intensified as the asset has recorded a 12% gain during the past week, which could lead to a top move.

XRP social dominance recently increased to higher values

According to data from on-chain analytics firm EmotionThe crowd optimism around XRP has increased recently. A relevant indicator here is “social volume”, which measures the total number of unique social media text documents that are currently mentioning a given coin or topic.

These “social media text documents” refer to text-based posts or threads retrieved from various popular social media platforms such as Reddit, Twitter, and Telegram.

Since this metric only measures a specific number of such documents, it means that even if a post mentions cryptocurrency multiple times, its share of social volume still remains only one unit.

Because of this restriction, the indicator can provide a reliable picture of whether or not users are discussing the asset across wider social media platforms.

Another indicator, called “social dominance”, is also of interest here; This metric compares the social media volume of a cryptocurrency (which in the present case would be XRP) to the combined social volume of the top 100 assets by market cap in the sector.

Now, here is a chart that shows the trend of XRP social volume as well as social dominance over the past year:

The two metrics seem to have observed some pretty high values in recent days | Source: Santiment on Twitter

As shown in the graph above, both XRP social volume and social dominance have reached all-time highs recently. At the peak of this increase, the latter metric had reached a value of 16.2%, meaning that 16.2% of all discussions on social media websites related to the top 100 assets were about the coin.

These upgrades in the cryptocurrency’s social metrics come as the price outperformed all the largest coins in the market after registering gains of over 12% during the past week.

Generally, whenever social volume increases along with a price increase, it means that investors are becoming more optimistic about the near-term outcome of the asset.

While this kind of positive attention can sometimes help the price to rise further, it is also true that too much of it can actually have the opposite effect on the cryptocurrency.

Historically, digital asset markets have tended to move contrary to the expectations of crowd opinion, so a large amount of hype and excitement could present the perfect recipe for a top formation.

The latest spike in XRP’s social dominance is not necessarily bearish, but it is still something that could increase the chances of a top.

However, there has also been a bullish sign for the asset recently as the number of active addresses has risen sharply. Such a trend is usually a sign that a large number of users are participating in the blockchain, which is something that can help make price increases more sustainable.

xrp price

At the time of writing, XRP is trading around $0.5047, having gained 12% in the past week.

Looks like the coin has enjoyed a rise recently | Source: XRPUSD on TradingView

Featured Image from Kanchanara on Unsplash.com Charts from TradingView.com Santiment.net