How Social Narratives Drive Crypto Prices, According to Santiment

• Emotional elements like hype and fear play significant roles in driving crypto prices.
• Pavel Durov’s Arrest caused a price dip in the crypto market.
• Narratives around litigations by the SEC and Whale actions contribute to market sentiment

Read also: Crypto Market Jitters as Pavel Durov’s Release Odds Dwindle

A new Santiment analysis has revealed how emotions like hype and fear significantly influence crypto prices. A researcher’s report on the platform examined the impact of several recent high-profile events that brought in discussions within the crypto community, ultimately leading to market actions and price swings.

The Santiment researcher focused on several narratives driving these discussions and impacting crypto prices: the alleged link between crypto whales and the CAT memecoin, institutional interest in TON, and the arrest of Telegram founder Pavel Durov. These events have cumulatively engineered social narratives, following discussions among millions of crypto users, generating hypes and FUDs at various intervals.

Read also: OpenSea Faces SEC Scrutiny Over NFT Classification

One example cited was Durov’s arrest, which caused concern due to Telegram’s widespread use within the crypto community. Although the market initially dipped, it rebounded as users realized Telegram’s functioning was unlikely to be affected by Durov’s legal troubles.

Other narratives impacting the market included regulatory concerns, such as the recent Wells notice from the SEC to OpenSea, threatening legal action over the classification of NFTs as securities. This had left NFT traders anxious about potential consequences, especially given the outcomes of similar legal battles.

Meanwhile, the memecoin sector continued to play a significant role in the 2024 crypto market, and as such the hype surrounding memecoins like PEPE remained strong. Discussions around AI’s integration with blockchain technology also contributed to shaping market trends.

On a crucial note, observing the market reveals how crypto prices consistently move in the opposite direction of crowd sentiment. Santiment’s analyst highlighted that traders who follow the crowd are often caught off guard by the eventual price reversals. Hence, his suggestion for crypto traders to approach the market with caution.

However, the analyst noted that the narratives shaping the 2024 crypto market are still evolving. Hence, traders need to closely observe the nature of the trends to understand their cyclic nature and how crowd sentiment can lead to counterintuitive price movements.