January 24, 2025
Social Media Could Be Your Secret Crypto Weapon
Dear Subscriber,
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| By Bruce Ng |
Yesterday, Jurica Dujmovic brilliantly explained why market sentiment should be on your crypto investing radar.
As he said, “Crypto sentiment is basically the collective mood of investors, traders and that guy who won't stop talking about Bitcoin at dinner.”
And he outlined the numerous advantages to keeping your thumb on the pulse of crypto traders. I suggest you check those out if you haven’t yet.
Jurica gave you a few solid ways to track market sentiment. And he showed you how to read them.
Now, I want to add another tool to your arsenal.
Earlier this month, I introduced you to Dexu.
This AI platform can help you find which narratives and even coins are trending among the crypto community’s social media.
I showed you the basics before. Now, I want to show you how you can take Dexu to the next level.
Let’s get back to the Twitter Word Cloud I used last time:
This dashboard shows you a glance the engagement around keywords currently trending on Crypto Twitter — the community of crypto experts on X.com (formerly Twitter).
And I’ve set it up in a specific way to explore how you can customize this tool.
My idea is that different categories of people will have different vested interests. I know that’s not revolutionary thinking. But it is important to know what major market influencers think and focus on.
Just think about every headline you’ve seen about Warren Buffett’s ideas on investing.
But instead of relying on traditional media to feed us the stories they want us to hear, Dexu can help you target specific communities and trends.
This way, you can be “in-the-know” … without waiting for a crypto event to break containment and make its way to mainstream news outlets.
Here’s how it works …
First, select the time range of the word cloud using the first drop-down menu on the top left, marked by the yellow 1. I’ve got 7D selected here to cover the past seven days.
Then, select the various categories of Tweet posters from the second drop-down menu, marked by the yellow 2.
The categories you can choose from include:
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Degens: These are your average Crypto Twitter user. They aren’t recognized within the industry as experts, but they are more knowledgeable about crypto than most people. They are also able to use most, if not all, the crypto tools without too much difficulty.
Degens have likely gone through multiple crypto cycles and usually trade or invest on the higher end of the risk curve. Their tweets may be useful to get a feel for what’s trending or about to trend. However, you should be careful. Degens can range from genuinely helpful and knowledgeable … to the outright scammy and malicious.
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Founders: These are founders of crypto projects. They are mostly incentivized to promote their own project coins and may even deride the projects of their competitors.
Their outlooks should be taken with a grain of salt thanks to their clear incentive to drive adoption for their project. But they also tend to have more insight when it comes to blockchain developments.
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VCs: Crypto Venture Capitalists typically obtain an early allocation of tokens in the projects they invest in. While it is publicly announced that most of these tokens are locked up and vested, some VCs can manipulate the market price of their tokens by hiring market makers. VCs are also incentivized to promote their portfolio coins.
Like founders, this means their claims should be reviewed critically. But their marketing efforts typically ramp up especially when their lockup expires — a clear indication that volatility may be ahead for those projects.
- Key Opinion Leaders: Often shortened to the abbreviation KOL, these are large accounts (typically more than 100k followers) which get paid to promote a particular coin. Identifying the trending words in the word cloud here lets us know which coins are the most heavily marketed in an inorganic way.
- Traders: You’d want to know what’s buzzing in this category to learn about short-term trade ideas. That’s because these are generally respected and profitable accounts that generally focus on short-term trades. They have longevity because their takes are mostly correct. Although everyone is wrong sometimes. So you should still approach their outlook critically.
- DeFi: Due to this sector’s importance in the market, Dexi separates social media posts that deal with DeFi. This is a useful filter if you are using DeFi platforms for their services — such as lending or liquidity providing. And it’s also useful if you are just investing or trading in DeFi coins.
Separating the Word Cloud in this way allows you to identify who is saying what.
With this insight, you can be a better judge of whether hype around a project you are interested in is just a passing fad … or if it’s the beginning of a longer trend.
Here’s an example:
Your buddy tells you about a hot new crypto he’s invested in. He’s amped up, and you get excited, too.
But instead of jumping in with both feet, you go to Dexu.
First, you search for posts from KOLs over the past week. You’ll want to pay close attention to how many have been paid to push this project.
Then, you adjust your settings to search posts from Traders and Degens. How many are talking about this project organically? Does their analysis support the KOL hype?
To be clear, marketed coins aren’t necessarily a bad thing. It means the project has enough capital for marketing.
But what you really want to see is more organic hype. That means there is a stronger, more invested community supporting this project. And that is much more bullish in the long run.
With this, you are better prepared to sort through the thousands of crypto projects vying for your attention … and investment.
I will note, however, that sentiment analysis is only one facet of crypto analysis. You’ll also want to consider tokenomics, project fundamentals, technical analysis and broader market conditions for any project you’re interested in.
For example, my colleague Juan Villaverde just did a deep dive into Solana (SOL, “B”). He took all these factors — and his own Crypto Timing Model outlook — into account.
The result?
He believes this hot Layer-1 is ready to stand shoulder-to-shoulder with crypto giants Bitcoin (BTC, “A”) and Ethereum (ETH, “A-”) to form crypto’s new “Big Three.”
Click here to watch his latest SOL analysis.
Best,
Dr. Bruce Ng
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