How to detect the new crypto trends with LunarCrush
Earn your financial freedom with Dopamine
The crypto landscape is a dynamic one, to say the least… Some projects skyrocket while others go bust every day. Still, there are some explicit patterns and trends in this seemingly chaotic market.
Experienced investors will easily identify them. If you’re wondering how exactly they do that, here’s some explanation.
They employ sentiment analysis tools (for eg. LunarCrush), which provide them with valuable market insights.
In Part 1 of our series about sentiment analysis in the crypto market, you learned how the algorithm of LunarCrush performs this analysis. Now, you’ll discover how to use the results you get in LunarCrush to leverage the power of sentiment analysis and profit from the most current crypto trends.
How to use LunarCrush’s sentiment analysis to spot trends
By November this year, the crypto industry saw two major changes:
1) The spectacular rise of DeFi (decentralized finance)
2) The ongoing buzz around NFTs
But, within those trends, not all tokens are created equal; some are persistent in their pursuit of new ATHs, while the rest simply follow the momentum created by the hottest assets. This is the principle of “winner takes all.”
So, in order to profit from following a trend, first you need to spot the winners. The Top 10 tokens by AltRank in early November are shown on the dashboard above. What conclusions can we draw from this list?
1) Several coins are tied to non-fungible tokens (NFTs) and gaming. The SAND token from Sandbox is in first place. Then there is Decentraland’s MANA token, which comes third in ranking. The NFT ecosystem is also related to the CHZ, CHR, and ENJ tokens.
2) Two tokens, LRC from Loopring and DOT from Polkadot, have recently surpassed their ATHs.
When we look at the charts for SAND and MANA, we can see that the assets have generated tremendous returns over the last 9 months, with SAND seeing a price increase of more than 39,500% and MANA seeing a price increase of 6,300%. Since both currencies reached their all-time high in early November, there has been a lot of social media buzz related to them, which has helped them rise to the top of the LunarCrush rankings.
What should you do based on these insights?
To get the most out of a trend, you must be among the early adopters. It may be too late to ride the trend after an asset has risen to the top of the rankings.
As a result, you’ll need to conduct extensive study and analysis of LunarCrush to determine whether assets are rising in the ranks as a result of social media buzz and/or price appreciation.
We may draw various observations from the Top 10 by Altrank mentioned above, and if we put them in context, we can plan our next move. We have 50% of the assets tied to the NFT and the broader metaverse ecosystem in the above screenshot. This can generally be attributed to Facebook that recently announced it will rebrand as Meta and invest $10 billion in the metaverse ecosystem. As one of the world’s largest internet corporations declared its intention to create a global metaverse, assets associated with this industry have begun to rise (see the SAND chart above).
In this case, we can assume that the metaverse and NFT are currently on the rise. But the Facebook announcement was exactly the boost those assets needed to rise to the top of the altcoin rankings; they had been trending for months without being at the top.
If you wish to take advantage of the NFT & Metaverse trend fuelled by Facebook right now, you should proceed with caution, since these assets are near their all-time highs.
How to get ready for a bull run using LunarCrush’s sentiment analysis
The first true Bitcoin bull run dates back to 2012. Since then each subsequent bull run has followed the same money flow pattern. In the first phase of the bull run, Bitcoin rises and reaches a new all-time high. The final phase is the legendary Alt Season, in which tokens sometimes referred to as “shitcoins” increase in value by ten- or hundredfold in just a week.
How to Prepare for an Alt Season
We can plan for the bull run now that we know how it will unfold in order to make the most of our earnings. The first two parts of the process are obvious. A strong Bitcoin with some media coverage will gain enough momentum for a proper run. Then, on LunarCrush, you’ll notice Bitcoin climbing, which is really unusual. In this early period, it is a good idea to invest a significant portion of your crypto portfolio into Bitcoin while keeping an eye out for any potential new trends, as we’ve seen previously.
After that, just as in March and April 2021, Ethereum will begin to outperform Bitcoin, and crypto people on Twitter will be talking about the so-called “Flippening.” This term means the likelihood of Ethereum’s (ETH) market capitalization surpassing Bitcoin’s (BTC) market capitalization.
Things will get interesting for us as we enter the third phase of the bull run. When a cryptocurrency’s market capitalization surpasses $10 billion, it is referred to as a Large Cap or Big Cap. According to CoinMarketCap, we now have roughly 20 Large Caps.
Phase 1 of the bull run in January 2021
This path to Alt Season was validated once again during the initial phase of the 2021 bull run. Bitcoin’s price doubled from $25,000 to $50,000 between January and March, after which Ethereum took over and exceeded Bitcoin, jumping from $1,400 to $4,300.
Large Caps and forgotten coins led the charge to new highs after the first two stages. The charts of Bitcoin Cash (BCH) or Litecoin (LTC) illustrate what we’re talking about. Between March 23 and May 12, the prices of both these assets increased by 200%, while Bitcoin and Ethereum remained flat. Last but not least, cryptocurrencies and shitcoins dominated the news in May. This is when most of us learnt about Shiba Inu (SHIBA), whose popularity skyrocketed by almost 2,000% in just a few weeks.
Phase 2 of the Alt Season in November 2021
We’re currently in the second stage of the 2021 bull run, and because history repeats itself, the same path to the AltSeason is happening. In October, Bitcoin hit a new all-time high, followed by Ethereum in November. In the coming weeks, you should expect some of the Large Caps to appreciate before the rest of the ecosystem catches up.
How do you identify greed using LunarCrush
With LunarCrush’s sentiment analysis, you can identify greed in the crypto market in two ways:
➢ When meme coins start to appear in the rankings
➢ When small caps start to rise in the rankings
If tokens like the ones below rise in the altcoin rankings, you can bet that people are talking about and buying memic crypto assets in a global speculative frenzy. Currently, there is a faint whiff of greed in the air, and everyone is talking about Shiba Inu and the next meme coin to rise by 10,000%.
You can check the Fear and Greed Index in the Discover section of the Dopamine App to confirm your assumption about how greedy market participants are. It is easy to spot that the market is quite greedy in early November. This is primarily due to the recent ATHs of Bitcoin and Ethereum. Because the main crypto assets are performing well, the rest of the market is paying attention to them, and market players are feeling optimistic.
When meme coins and small caps rise in the rankings on LunarCrush and the Fear & Greed Index remains in extreme greed for several weeks, you can be confident that the market as a whole is greedy. As a wise investor, you might wish to take advantage of this opportunity to make some profit before the market crashes, which it always does.
How can you predict the bottom of a market crash using LunarCrush
The market will always correct after a longer period of extreme greed, regardless of the market or the period. After noticing greed and collecting your earnings, you’re in the best position to calmly acquire your favorite cryptos following a market crash.
But how can you tell whether prices have finally reached the bottom?
As the saying goes, don’t try to catch falling knives. This means you must wait for a bottom before buying, or the asset you purchase could fall even more. If you want to be sure that prices have reached a low, you will take a look at the stablecoins Altrank.
In the above image, the highest-ranking stablecoin is Tether (USDT), which is ranked 184th. In a rising market, no one is buying stablecoins, and everyone is selling them for other cryptos. During panic periods and market crashes, however, all market players will flock to their favorite stablecoin, propelling them into the top ten rankings in LunarCrush. Tether USD and other stablecoins should appear on the top page in LunarCrush after everyone has sold their crypto for stablecoins.
And now that you know how powerful LunarCrush’s sentiment analysis is, all you have to do is sign up for an account and begin to observe the altcoin rankings for the next gem that will take your portfolio to the moon!
