Data shows the Internet Computer (ICP) social dominance has hit a 23-month high, a sign that a local top may be here for the cryptocurrency.
Internet Computer Investors Are Showing Signs Of Euphoria
According to data from the on-chain analytics firm Santiment, a large number of investors are talking about ICP following its recent bullish momentum. A relevant indicator here is the “social volume,” which measures the total number of social media text documents that contain mentions of a given asset.
The text documents here refer to a collection of data assembled by Santiment that includes posts and messages from social media websites like Reddit, Telegram, and Twitter.
This indicator only gauges the unique mentions of the asset in question, meaning that even if a forum post includes the term several times, its contribution towards the social volume still remains one unit.
Now, “social dominance” is a metric that compares the social volume of the given cryptocurrency with that of the top 100 assets (by market cap) combined. Here, the coin of interest is Internet Computer, so what this metric tells is how much of the discussion on the Internet related to cryptocurrencies, in general, includes the topic of ICP.
Here is a chart that shows the trend in the ICP social dominance over the last year:
Looks like the value of the metric has been pretty high in recent days | Source: Santiment on Twitter
As shown in the above graph, the Internet Computer social dominance has observed a very sharp spike recently as the price of the asset has shown some bullish momentum.
This latest uptrend in the asset’s value has been quite extraordinary when compared to the rest of the market, as most of the cryptocurrencies have only shown a flat movement or a decline in the same period.
Rapid upwards momentum like this can bring a lot of eyes toward an asset, and so, discussions about it naturally follow on social media. Because of this reason, it’s not unexpected that the ICP social dominance has shot up during this period of bullish divergence from the rest of the sector.
From the chart, it’s visible that the metric saw a large spike of similar scale only a week or so before this latest surge, and this spike too occurred as Internet Computer enjoyed some rapid rise.
Shortly after this previous spike in social dominance took place, however, the price topped above the $7 level as the bullish momentum petered out.
Generally, whenever there is a sharp rise in discussions around an asset during price surges, it’s a sign that euphoria may be building among investors. Historically, such market conditions have led to an increased possibility for the price to form a top. Internet Computer may have hit a local high during the past spike due to this reason.
As the latest surge in discussions around ICP is even higher in value than the previous instance, it’s possible that the coin may be at risk of declining currently.
The drawdown may have in fact already begun, as the cryptocurrency’s price has gone down by more than 5% during the last 24 hours. Though, not all the gains of the recent rally are lost yet, as the asset is still up 16% in the past month.
At the time of writing, ICP is trading around $6, up 14% in the last week.
The value of the asset seems to have plunged recently | Source: ICPUSD on TradingView