With the market largely recovering after a disastrous 2018, many investors are looking for the next tool in their arsenal to help them edge out the competition and recognize opportunities that others miss. Three such opportunities that may have been missed in May include EOS, Zcash (ZEC) and Lisk (LSK), all of which demonstrated impressive growth in this time.
Looking back, we analyze how aggregate indicators, such as the Sentscore, could be used to spot opportunities like these in the coming months.
The score combines five different weighted verticals to help cryptocurrency traders and enthusiasts quickly make better investment decisions without having to sieve through a mountain of data or perform in-depth technical analysis.
With that in mind, how did EOS, Zcash, and Lisk perform in the last month? Let’s find out.
Trending in May: EOS
Omenics’s Sentscore is formed of five different verticals, each of which can be used to indicate how the sentiment of a digital asset is changing over time:
- Social Media
- Technical Analysis
Although the Sentscore doesn’t measure whether changes in the sentiment landscape or positive or negative, we do find that changes in Sentscore often precede price changes — making it a useful predictive tool.
Taking EOS as a prime example, we see that, throughout the month of May, its Sentscore score gradually increased from between 5 and 6 in early May up to almost 8.5 over a three week period.
Typically, a Sentscore between 4 to 6 would be considered neutral, e.g. that sentiment falls within the normal range during this period. A Sentscore between 7.5 and 10, however, indicates that the amount of interest in the coin has dramatically increased and could indicate that a cryptocurrency is now trending. With the EOS Sentscore score climbing from under 5 to almost 8.5, this demonstrates a large change in interest.
Comparing the Sentscore (purple line) with EOS value during this time, we can see that an increase in Sentscore immediately precedes or overlaps with a spiking price. During the period where the Sentscore increased by more than 3 points, the value of EOS climbed from around $4.80 up to as much as $8.40 by May 30.
Looking at changes in the buzz score can help traders identify which coins have something interesting going on. Looking back at the news during this period, we find that there was a lot of talk relating to the excellent throughput of the EOS blockchain relative to its competitors while EOS development company Block.One was said to be buying back 10 percent of its stock — a demonstrator of financial strength.
Biggest Recovery: Zcash (ZEC)
One potential way the Sentscore can be used to identify promising opportunities is by looking at cryptocurrencies experiencing a large positive change in Sentscore over a short period of time.
In the month of May, Omenics found that, of all the cryptocurrencies tracked by the firm, Zcash experienced the largest relative change in Sentscore — climbing from around 3.6 to 5.8 over a two-week period.
Interestingly, we find that even though the price of Zcash (ZEC) was falling in early May, the Omenics Sentscore began climbing during this time — spiking from under 4 to almost 5 over a one-week period. As the Sentscore reached its first peak on May 10, the Zcash price began an extraordinary reversal, climbing from $56 up to a peak value of over $95 by the end of May.
Similarly, throughout the period between May 17 and May 31, the Sentscore almost exactly mirrored the changing price of ZEC. Because of this, it is apparent that the Sentscore was an excellent indicator and predictor of the sentiment surrounding ZEC and can be used to predict impending bullish movements — even when the price action doesn’t look strong.
Since the Sentscore is an aggregate of five different indicators, seeing the Sentscore increase by such a large amount over such a short period of time can indicate one of two things:
- A single vertical has drastically increased over this period
- There was a large increase in several different indicators.
In any case, a large spread could be used to identify cryptocurrencies on the verge of a strong price movement.
The benefits of tracking the Sentscore spread is further demonstrated when looking at both Binance Coin (purple) and Augur (blue) in the chart below.
Here, we find that Binance Coin (BNB) began to experience a monumental increase in Sentscore around May 10 — climbing from barely over 3 to well over 6 in under two weeks. During this time, news emerged that Binance had been breached and some 7,000 BTC stolen from its hot wallet, while rumors of an impending margin trading upgrade began to circulate.
Conversely, Augur (REP) experienced a large negative change in Sentscore — with this collapsing from close to 6 down to under 3.5 over a two week period as sentiment surrounding the cryptocurrency waned. During this time period, the REP price remained relatively stagnant before surging between May 12 and 14, with the Sentscore experiencing a similar recovery.
Highest Change in Market Sentiment: LSK
Among the verticals monitored by Omenics, the social score is arguably one of the most powerful — monitoring the social media sentiment of a cryptocurrency. To achieve this, Omenics use “textual analysis of posts and comments from a curation of Twitter influencers and subreddits.”
Like the other indicators, the social score is purely quantitative, meaning it does not differentiate whether this increased social attention is overall positive or negative. However, it can still be a powerful tool used to identify when the discussion around a digital asset has started to increase — potentially indicating promising investment opportunities.
In May, Lisk (LSK) achieved the largest positive spread for the Sentscore social indicator — climbing from a low of 3.1 at the start of May up to almost 6.5 by the end of the month.
Comparing this to REP, which experienced a striking drop in social score between May 20 and May 27, we find that LSK instead saw its score climb during this same period. This indicates that between this period, there was a large increase in social media activity pertaining to Lisk — while the discussion of Augur largely subsided.
All-in-all, we find that aggregate indicators that give traders a quick overview of the current strength of a cryptocurrency can be helpful in highlighting opportunities that are worth taking a deeper look into. By then looking in-depth analytics and the content aggregated by the Omenics platform, users could then easily gauge whether to enter or exit a position in this coin.
Do you think the growth of EOS and ZEC will be sustained throughout June? Or which other cryptocurrencies do you think will be the biggest gainers in the coming month? Let us know your thoughts in the comments below!