Social media has become the dominant form of communication in recent years. Before you watch a news bulletin on TV or a newspaper, you will likely have seen tweets or posts about it on social media.
The same effect holds for top cryptocurrencies like Bitcoin, Ethereum, and meme coins like Pepe. Social media has accelerated awareness and communication in this industry. You can track coin prices, developments related to Binance and other mega exchanges, regulatory changes, and more instantly on social media.
In fact, cryptocurrency may not have done so well if it had not emerged in the social media age. The mainstream media only started talking about crypto when it became inevitable around 2017. Most of the awareness was through Reddit, X (formerly Twitter), and related channels.
Social Media And Price Volatility
Cryptocurrency is inherently volatile. It does not operate on markets that close at the end of the day or have a central bank to pump cash to prop up the system. Instead, the supply and demand forces apply fully.
Therefore, speculation on social media plays an indispensable role in crypto volatility. The textbook example of this is Dogecoin. It is a meme-based cryptocurrency languished in obscurity for years. It gradually gained traction as a humorous project on Twitter and Reddit. Promotional activity by the likes of Elon Musk helped the coin rally 1000% at points in 2019 and 2020.
According to Binance, it peaked at a market capitalization of just over $43 billion in 2021 and reached a current market cap of $18.17 billion in October 2024. This feat was extraordinary for a coin that was pretty much a Bitcoin parody. Other meme coins like Shiba Inu and Pepe have seen rallies from similar speculation.ย
Such is the power of social media for cryptocurrencies. When enough people online believe that a coin or token is hot, it has a corresponding effect on the prices. Similarly, speculation relating to a coinโs misfortunes can make crashes worse than they should actually be.
Thanks to social media, some unique crypto trends exist. One is the hold-on-dear-life phenomenon (HODL) that underpins crypto holders’ resilience. This phenomenon is where crypto holders encourage each other to hold onto crypto during crashes because of future upside. HODL trends can provide support levels for some cryptocurrencies during a market rout.
Navigating Social Media For A Crypto Holder
A crypto holder cannot live or die by what they see on social media. There are times when crypto whales engage in pump-and-dump schemes. Such campaigns can be misleading regarding a coinโs true value since social media amplifies rapid price action.
Therefore, social media activity must be consumed carefully. It can be worth exploring if volatility is due to actual regulatory or technical development. Otherwise, you will find yourself in fear-of-missing-out (FOMO) decisions that are counterproductive.
Social media is indispensable for analyzing cryptocurrency market trends. It can provide a persuasive gauge of price activity but should not be an absolute determiner.