Altcoin Roundup: Data shows social metrics surge ahead of DeFi and NFT price rallies

A common saying in the investing world is “The trend is your friend,” a phrase that points to the idea that the majority of the time, sticking with the prevailing market trend will produce positive results.

Some of the common metrics used to identify market trends include: technical analysis, which involves studying price charts to spot opportunities; fundamental analysis, which involves looking at a project’s underlying economic and technological factors; and social media metrics, which help an investor listen to the pulse of what the wider public is focused on.

One of the more popular metrics that crypto traders use to identify emerging patterns is Google Trends, a product that analyzes the popularity of search queries performed via Google’s search engine. Using Google Trends, users can view the data in simple line graphs that also provide a breakdown by geographical region.

The Google Trends chart for “Bitcoin” shows several sharp spikes in searches over the past year, most notably in early January, late February, mid-April and again in mid-May.

A look at the BTC price chart shows that each of the spikes in Google searches coincided with run-ups in the price of Bitcoin (BTC) and indicates that search queries do indeed offer some insight into identifying trends that could impact prices.

The same approach can also be applied to altcoins and decentralized finance (DeFi) tokens. Let’s take a look at how social analysis preceded the rise of popular NFT-related tokens and DeFi blue chips like Polygon’s MATIC.

Interest in DeFi came in two waves

DeFi was the hottest sector in the cryptocurrency market at the beginning of 2021, and it seemed like not a day passed without some newly emerged lending or farming protocol reaching $1 billion in total value locked.

Data from CoinGecko shows that the total market capitalization of the top 100 DeFi tokens began to rapidly increase in mid-January, and eventually, the figure peaked in mid-May after the entire cryptocurrency market proceeded to sell off.

Searching “DeFi” in Google Trends produces the following chart, which actually shows a spike in the number of queries around the same time as the market cap of DeFi tokens began to increase.

This figure continued to increase even after the number of queries declined during the month of March.

Spikes seen in the number of searches in April and again in May also occurred around the same time as spikes in the DeFi market cap.

Searches for “NFT” went parabolic at the end of February

The rise of nonfungible tokens, or NFTs, in February and March caught the world’s attention as big-name celebrities like NFL veteran Rob Gronkowski and Twitter CEO Jack Dorsey got in on the action and established auction houses like Sotheby’s helped…