On-chain data shows that Chainlink’s social dominance has observed a large spike after its sharp price surge, a possible sign that the top may be here.
Chainlink Social Dominance Rises To 3rd Largest In Cryptocurrency Sector
According to data from the on-chain analytics firm Santiment, LINK is the third most trending asset in the market right now. The indicator of interest here is the “social dominance,” to understand which another metric needs to be looked at first: the social volume.
The social volume measures the total amount of social media text documents (that is, text-based posts, threads, messages, etc.) that are making mentions of a given asset (which, in the current case, is Chainlink).
This metric basically provides us with information about the degree of discussion that a particular coin is receiving across major social media platforms like Twitter, Reddit, Telegram, and 4chan.
Now, the aforementioned social dominance is a metric that compares the social volume of a cryptocurrency, with combined that of the top 100 assets by market cap in the space.
Naturally, in the case of LINK, this indicator tells us how much talk related to the top coins in the market is coming from discussions centered on Chainlink alone.
Here is a chart that shows the trend in the LINK social dominance over the past month:
Looks like the value of the metric has been quite high in recent days | Source: Santiment on Twitter
As displayed in the above graph, Chainlink’s social dominance has registered a large spike following the rapid growth in the price of the cryptocurrency during the last couple of days.
At the peak of this latest sharp surge, the asset’s value had climbed above the $8.4 mark, but since then the cryptocurrency has gone down a bit. Nonetheless, the price is still floating above $8.1 and the coin’s gains stand at an impressive 19%.
Historically, rallies like these have attracted a lot of eyes to LINK, so it’s not particularly surprising that the cryptocurrency’s share of discussions in the sector has shot up.
The scale of this rise, though, may be a slightly worrying sign. Chainlink is the third most talked about asset in the market right now, despite being only the 20th largest in terms of market cap.
Generally, when an asset is being talked about too much, the price can become more probable to show a move opposite to what this large crowd is expecting. Given that the latest discussions have come just after the rally, it would appear likely that these talks are in fact a sign of hype in the market.
Such amount of hype has often proved to be a bearish signal for Chainlink, as tops become more likely to form in this kind of market environment. If a similar pattern follows now as well, then it may mean that the current social dominance spike is a sign that a local top is already in for the cryptocurrency.
At the time of writing, Chainlink is trading around $8.1, up 15% in the last week.
LINK has shot up during the past couple of days | Source: LINKUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, Santiment.net