To some, trading and investing in cryptocurrencies are synonymous with technical analysis. To others, technical analysis is nothing more than an illustration of community-driven passion.
After spending countless hours on technical analysis only to find themselves using Twitter as a source for trading, Joe Vezzani and Jon Farjo decided it was time to reap the power of social media for crypto. The two came up with the idea while working together and used the knowledge and experience they gained in a well-structured, traditional business to bring a new product to the crypto market.
Speaking to Cryptonites’ Alex Fazel in London, Vezzani and Farjo said that it took two years of trial and error before they settled on the idea for LunarCrush. They set out to find a way to make sense of the social media data they’ve been gathering and use it to determine the overall trends in the crypto market.
Farjo explained that LunarCrush works by surfacing insights from social media. The platform captures around 3 million opinions every day from Twitter, Reddit, Instagram, YouTube, and other social media platforms and uses advanced algorithms to determine their sentiment. The more opinions the platform aggregates, the better it becomes in figuring out what they mean. Every interaction with the community makes LunarCrush and its dataset stronger and more reliable, Farjo said.
This has made LunarCrush one of the best social analytics platforms in the crypto market. The platform enables users to make sense of the billions of social media interactions that occur daily and determine what the broader community thinks.
Farjo said that while most traders rely on technical analysis, social analysis remains underused. He believes technical analysis provides insight into short-term price swings that only some traders might take advantage of. However, the social analysis provides the foundation that technical analysis is missing.
“Volume doesn’t create itself and price doesn’t push itself up,” Farjo said.
What creates volumes and pushes prices up or down is the community behind a coin.
Vezzani noted that tracking community engagement enabled LunarCrush to catch some of the largest and most promising crypto projects at their very beginning. The community engagement around Chainlink, Solana, and Avalanche was visible on the platform early on. And early network growth looks a lot like continuous community growth.
Farjo noted that community growth heavily correlates with the growth in the number of wallets and the growth in the overall number of transactions on a network. This, in turn, drives the price of its token up.
“Community creates price,” Farjo said, not the other way around.
Source: https://cryptoslate.com/videos/the-founders-of-lunarcrush-on-how-the-community-creates-price/