There is a saying in the investment world that “the trend is your friend”, this sentence shows that in most cases, sticking to the current market trend will produce positive results.
Some common indicators used to identify market trends include: Technical analysis, which involves Study price charts to discover opportunities; Fundamental analysis, including looking at the potential economic and technical factors of the project; and social media indicators, which help investors listen to the pulse of wider public attention.
A more popular metric used by crypto traders to identify emerging patterns is Google Trends, which is an analysis Popularity of search queries Execute through Google’s search engine. Using Google Trends, users can view data in simple line charts that also provide breakdowns by geographic area.
The Google Trends chart of “Bitcoin” shows that there have been several sharp increases in search volume in the past year, most notably in early January, late February, mid-April, and mid-May.
Looking at the BTC price chart shows that every peak in Google search coincides with the rise in the price of Bitcoin (Bitcoin) And show that the search query does provide some insight to identify trends that may affect prices.
The same method can also be applied to altcoins and decentralized finance (DeFi) tokens.Let’s take a look at how social analysis before the rise Popular NFT related tokens And DeFi blue chips like Polygon’s MATIC.
There are two waves of interest in DeFi
At the beginning of 2021, DeFi is the hottest area in the cryptocurrency market, and it seems that every day there are no new loans or agricultural agreements reaching $1 billion Total value locked.
CoinGecko’s data shows that the total market value of the top 100 DeFi tokens began to grow rapidly in mid-January, and finally after the entire cryptocurrency market began to sell off, this number reached its peak in mid-May.
Searching for “DeFi” in Google Trends will produce the following chart, which actually shows that the number of queries surged at the same time that the market value of DeFi tokens began to increase.
Even after the number of queries dropped in March, this number continued to increase.
The surge in search volume in April and May also coincided with the surge in DeFi’s market value.
Search volume for “NFT” was parabolic at the end of February
In February and March, the rise of non-fungible tokens (NFT) attracted worldwide attention due to big-name celebrities such as NFL veteran Rob Gronkowski and Twitter CEO Jack Dorsey start to act Established auction houses like Sotheby’s have helped facilitate NFT auctions, including Recently sold CryptoPunk #7523, Sold for a record US$11.8 million.
Some of the biggest monthly gains from the NFT project include the 443% price increase of THETA between March 1st and 21st, and the 530% price increase of Axie Infinity Shards (AXS) between February 23rd and March 15th. The price of CHZ) surged by 3,690% between February 13 and March 13.
The price increase coincided with the surge in NFT-related searches registered by Google Trends.
Although it is widely reported that NFT has robbed DeFi from the limelight, when DeFi and NFT search interest charts are combined, evidence of rotation can be seen. As shown in the figure below, with the decrease in DeFi search volume, the number of NFT queries suddenly increases.
The number of NFT search queries is also significantly higher than that of DeFi, suggesting that irreplaceable tokens may be the best way to encourage widespread adoption of cryptocurrencies.
Judging from the time frame from late February to early March on the price chart, the time when the price of DeFi tokens fell and the price of NFT tokens started to rise are roughly the same, which indicates a shift from DeFi to NFT to a certain extent.
Both charts show that the spike in search interest is in line with the price increase of related DeFi and NFT tokens, and they also managed to capture the decline in interest that followed the price drop in June and July.
Twitter mentions can also hint at increasing adoption
Twitter is also a A good source of insight Understand and analyze the tokens that retail investors may be interested in Twitter mentions Can help hone in which items are likely to see future price changes.
In 2021, Polygon became one of the most promising second-layer solutions for the Ethereum network. As the price of its native MATIC token soared from $0.33 on April 26 to a record high of $2.68, social media mentions Significantly increased on May 18.
As shown in the figure above, data from TheTIE shows that most of the sharp increase in the price of MATIC occurred at the same time as the surge in the number of tweets mentioning the keyword “MATIC”.
Google Trends also shows that searches for “polygons” have increased during this period, with the initial peak of interest occurring in the week of April 25 to May 1.
Although many analysts and trend watchers prefer to use technology and fundamental analysis to grasp the pulse of development trends, it is important to remember that without the participation of people in the network, any cryptocurrency project has no value.
This means that valuable insights can always be found when analyzing information and announcements that attract people’s attention and trigger public participation.
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