Solana has shown a breakout over the past few days, but the data shows that FOMO is on the rise, which could be a bad sign for a rally.
Solana’s social trading volume rose along with the rally
According to data from blockchain analytics firm saintSOL’s social trading volume has seen a sharp increase following the recent recovery of cryptocurrencies.
“Social volume” here refers to an indicator that tracks the degree of discussion any given asset receives on major social media platforms.
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This metric performs this measurement by counting the unique number of posts/topics/messages, mentioning the cryptocurrency at least once.
The indicator doesn’t just count the mentions themselves, because sometimes a large number of mentions can appear within a few posts, and at the same time, the discussion can be fairly dead on the rest of social media.
High signals indicate that there is a lot of discussion in this case, but in reality, all the talk is confined within specific circles. By measuring the number of posts, social media volume can tell us about the trend across social media.
Now, here’s a chart showing the trend in Solana social volume over the past week or so:
As you can see in the chart above, Solana Social trading volume has been growing rapidly recently. This means that the intensity of discussions surrounding the asset has suddenly increased.
This increase in the index is likely driven by the rise that the currency price has enjoyed recently. In this new surge, SOL recovered from a low of around $124 to the current $146 mark, meaning it saw returns of nearly 18% in just a few days.
High social trading volume coupled with a rally is not unusual, as social media users find sharp price movement interesting, so they engage in more discussions than usual.
However, the magnitude of the rise seen in the metric this time may be worth noting. Historically, the asset price has tended to move against majority expectations, so suddenly excessive excitement could be a bearish signal for the cryptocurrency.
In the same chart, Santiment attached social volume data for Avalanche (AVAX), which has also seen a recovery wave. It seems that unlike Solana’s rise, few people care about Avalanche’s rise, as the index value has remained relatively low.
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Therefore, AVAX’s rally is likely to be more sustainable than SOL’s, as it has seen much less FOMO, at least according to Social Volume.
Sol price
Solana broke through the $151 level yesterday, but the asset has since seen a slight pullback to $146. It is currently unclear whether this means that the negative effect of FOMO has actually begun in SOL.
Featured image from Shutterstock.com, Santiment.net, chart from TradingView.com