Crypto markets are notoriously fickle. Around here, fundamentals don't drive prices to the same extent as stocks; instead, ratings tend to reflect an unhealthy mix of vibes, cult of personality, and memes.
As a result, investing and trading in cryptocurrencies is murky. Active users, rate generation, total value locked or even developer count are metrics that should matter. But They really don't.
Sentiment is king, and the high correlation between digital assets means that when things go bad for bitcoin, the rest of the market almost always suffers.
It is no surprise, then, that the concept of “hated rallies” has emerged as our current bearish cycle shows signs of abating. The idea is that the more hated the cryptocurrency, the more likely it will pump strongly as altcoin season progresses.
Take Solana (SUN), which has attracted haters from the Vitalik-maxi group since it was dubbed an “Ethereum killer” sometime around 2018. Like Ethereum, Solana supports apps, NFTs, stablecoins, and tokens, but with about 100 times the performance.
Cryptocurrency purists eager to hate Solana might argue that the network is more centralized than Ethereum due to its smaller number of nodes (around 2,900 to 7,700) and supposedly High costs associated with launching a validator node.
Bitcoin fans, on the other hand, would just shit on Solana for running an initial coin offering in the first place. (Its delegated proof-of-stake consensus model doesn't do the Orange Coin crowd any favors either.)
Solana's hatred from ethereums and bitcoiners was heightened even by the fringes of the crypto space when FTX failed. Conman Sam Bankman-Fried, now convicted, was one of Solana's most prominent. disgusting sponsors, having financed significant parts of the Solana ecosystem from scratch.
Solana is one of the top 100 performing cryptocurrencies this year after rising more than 400%, going from less than $10 to more than $56. SOL has more than doubled in the last month alone.
SOL would still need to multiply three and a half times to reach its all-time high set in 2021. But despite all its haters, Solana has easily surpassed the top two: ETH has gained around 70% so far this year. , BTC around 120%.
Other recent “hated rallies” include the Terra Luna Classic (far) - the same cryptocurrency at the heart of Do Kwon's Magnanimously Flawed Algorithmic Stablecoin Empire. LUNC was good for a rally of more than 40 percent in one day late last week.
the new edition MOON token, now led by the Terra community without Kwon, rose 73% on the same day, while FTTthe token once native to the still-bankrupt Bankman-Fried crypto exchange FTX has doubled.
Even the minimum price for Bored Ape Yacht Club NFTs has increased more than 60% from its August lows, going from $37,000 to over $60,000. In terms of scale, the S&P 500 is up 2% over the same period.
Does all this mean that more haters become higher price bombs? After getting sentiment readings from data service provider The Tie, I'm not totally convinced.
The Tie recorded long-term negative sentiment for nearly two-thirds of the cryptocurrencies in the top 100 by market cap. other than stablecoins, wrapped tokens or otherwise staked. Only about a quarter of them have outperformed Bitcoin so far this year.
East-West Connection Conflux A 640% jump leads the pack along with Solana, FTT and THORChain, which has quadrupled since January.
At the same time, about a quarter of the top 30 cryptocurrencies with positive sentiment at the beginning of the year have outperformed BTC. That includes MakerDAO's 160% rally and Injective's monster 1100% surge.
(Erik Saberski, vice president of data science at The Tie, told me that long-term sentiment is calculated by collecting Twitter posts about certain cryptocurrencies and measuring how positive or negative they are. It's a "simple approach commonly known as" stock market words", where each word has a sentiment score: some negative, some positive. The overall tweet is positive if the words on average are positive; negative if the words on average are negative").
The data suggests that negative sentiment affected most major cryptocurrencies at the beginning of the year, with many turning positive after bitcoin recovered. It was all to be expected given how brutal this crypto winter has been.
Of course, many cryptocurrencies with negative sentiment this year have recovered strongly, but since practically all of them suffered bad vibes, it should not be given too much importance.
The data does show something of the opposite. There is a correlation between negative sentiment and poor returns: of the 60 non-wrapped or staked stablecoin tokens in the top 100 that have underperformed bitcoin, two-thirds started the year with negative sentiment.
ApeCoin, the token that will one day be the heart of Yuga Labs' Bored Apes metaverse, is the clearest case, down over 60% with moderately bad Twitter sentiment. Craig Wright's BSV, which showed the most negative sentiment at the beginning of the year of all the cryptocurrencies analyzed, is another, having risen only 20% while the rest of the market exploded.
So it might be tempting to base portfolio decisions on how intensely the haters hate. But it's probably better to stick to some other proven metric, like, I don't know, astrological alignment?
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