In a Twitter thread, crypto analytics provider The Tie details its Hype-to-Activity Ratio. The metric is a measure of the number of tweets about a crypto asset per one million dollars in trading volume (using 30-day averages for both).
“Across the 450 crypto assets we investigated, there were an average of 1.02 tweets per $1M in [trading] volume,” The Tie stated on Twitter.
However, there were a number of outliers on both ends. According to the company’s analysis the most overhyped assets were TokenPay, Electroneum, and Dragonchain, followed by Telcoin and DigiByte.
Don’t believe the hype?
TokenPay, Electroneum, and Dragonchain have each received over 500 times the average number of tweets that for a crypto asset. This suggests that Twitter mentions for these assets is being manipulated and artificially inflated by investors, the project's community, or the project themselves.
Regardless of who is behind the inflated social media engagement for these projects, this information should be considered a red flag about these digital assets as their real investor interest is substantially lower than it appears on Twitter.
The Tie also found that the least overhyped coin is tether (USDT), which can be explained by the fact that it is a stablecoin and its social media fanbase is limited despite its high trading volumes.
The remaining assets in the top five least overhyped cryptocurrencies include EOS (EOS), Ethereum Classic (ETC), Cosmos (ATOM), and NEO (NEO).
The XRP (Bot) army
Among the largest crypto assets measured by market capitalization, the Hype-to-Activity Ratio holds steady, which suggests that the world’s leading digital currencies and tokens are not being aggressively overhyped on social media. However, there is one exception: XRP.
While bitcoin (BTC), ether (ETH), litecoin (LTC), and bitcoin cash (BCH) have Hype-to-Activity Ratios of between 0.71 and 1.72, XRP shows a ratio of 4.07. Furthermore, the researchers say that if the hashtags #XRPCommunity, #XRPTheStandard, and #XRPArmy were included in the analysis, the figure would rise to 6.6. That is six times the average of all 450 assessed crypto assets.
That XRP stands out with a higher Hype-to-Activity Ratio when compared to market-leading peers should come as no surprise. Recent revelations by Goeff Goldberg suggest that the infamous “XRP Army” is primarily made up of fake accounts and bots.
When compared to other altcoins, however, Ripple’s XRP actually ranks quite low.
Are altcoins overhyped?
Looking at the most overhyped crypto assets with over 50 tweets per day chart (on a logarithmic scale) below, you can see that XRP ranks quite low on the overhyped scale.
The Tie’s findings indicate that overhyping a digital asset on social media is commonplace in the altcoin market and even large projects such as IOTA (IOTA), Tezos (XTZ), NANO (NANO), and Cardano (ADA) may be receiving more attention on Crypto Twitter than is merited by real trading interest.
“Just like trading volume manipulation, many of these coins are similarly being manipulated on Twitter by hoards of bot accounts, fake followers, and manipulated engagement,” The Tie believes.
The company also adds that crypto assets with high levels of Twitter activity also have an irrationally high number of Twitter followers, many of which are fake. The idea behind this is to seem more legitimate. The example that the company shares is that Electroneum has 127,000 followers while the most popular margin trading platform BitMEX has “only” 65,000.
“While significant efforts are being made to improve legitimacy, the industry remains very much the wild west. Although many within crypto can easily detect manipulative practices, this deception is aimed at new entrants into crypto who are often less informed,” The Tie concludes.
While a simple comparison of tweets in relation to trading volumes may not be the end-all-be-all of crypto asset evaluation methods, The Tie’s analysis does highlight the fact that some altcoins are more hype than substance and, perhaps more importantly, you should never make investment decisions based on what you read on social media.