Hey DEFI TIMES community,
An on-chain analysis is a great tool to get a feeling of fundamentals beyond price action. How many people are in profit? Are miners selling or hodling? Is the market overheated or not?
You get a good feeling of the overall market sentiment to determine local or long-term tops. Everything is transparent on a blockchain, which is why you see stats ranging from the most prominent players to the little guys.
You see how many addresses there are with >0.1 BTC and >10,000 BTC. You can see how many bitcoin are entering the Grayscale Trust or the Canadian Bitcoin ETF.
However, an on-chain analysis should only be a part of your research. Social stats are just as essential.
But what are social stats? Well, analytics tools like SensorTower or Similarweb let you examine several indicators like the number of people searching for "Bitcoin" on Google or the Coinbase ranking in the App store.
Social stats give a feeling of how popular crypto is in the broader society. They show what the market sentiment is like and how many new people are interested in crypto.
And that's what we are going to analyze today!
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Bitcoin vs. Ethereum Web Searches
On Google Trends, you can analyze the Google search volume for specific keywords. The website doesn't show absolute numbers but instead relative changes.
Let's take a look at the search trends for "Ethereum." As you can see, the number of searches already hit an all-time high compared to the 2017 peak.
In contrast to Ethereum, Google searches for "Bitcoin" haven't even reached another all-time high.
Right now, they are comfortably sitting at around 25% percent of 2017 high. But what does that mean?
Well, fewer people are searching for "Bitcoin" on Google while Bitcoin's price is skyrocketing. How is that possible.
Last Monday, we talked about the fact that institutional investors are driving the market: Fewer market participants with more capital.
In contrast to Bitcoin, the Ethereum price action seems to be retail-driven. Just as the ETH price, Google searches have reached an all-time high.
Another interesting observation is the comparison between "Bitcoin" and "Ethereum" searches. In absolute numbers, "Ethereum" searches aren't even close to "Bitcoin" searches.
The search difference makes sense when you consider that Bitcoin's total market capitalization is five times the size of Ethereum:
- Bitcoin → $1 Trillion
- Ethereum → $200 billion
If you are one of those who believe that Ethereum will flip Bitcoin soon, you should take a look at the facts.
- Bitcoins searches outnumber Ethereum's searches
- More institutional investors are in Bitcoin
- Bitcoin's market capitalization is five times the size of Ethereum
The flippening won't happen any time soon - Bitcoin's social stats are too strong.
Trends within the Ethereum ecosystem
Another great comparison is the search volume within the Ethereum ecosystem. We see two dominant narratives: DeFi and NFTs.
NFTs have been in the background for a while; however, sometime in early 2021, the curiosity for NFTs exploded and went far beyond the search volume for DeFi.
It's pretty wild to observe how quickly NFTs have captured the mainstream's attention. You all know that! We covered it many times in this newsletter! The NFT hype feels a little like DeFi summer 2020. A whole new ecosystem evolves through speculation and gambling. We see a bubble emerging, which will ultimately pop - fundamentally strong ideas will survive and thrive!
DeFi summer, on the other hand, is over, and the speculation is gone. The DeFi ecosystem's growth seems as sustainable as never before. I expect a similar thing to happen to NFTs. In six months, the hype will fade - NFTs will stay and change the world!
Let's take a look at social media stats - another way to get a feeling for public attention. By analyzing daily/weekly new views of crypto-related videos on YouTube, we understand how many new people are learning about crypto.
As you can see, since the beginning of 2021, BitBoy (probably the biggest crypto YouTube out there) has experienced an excessive growth of his YouTube channel. There's an insane number of new people learning about crypto right now.
Just with the Google search statistics, YouTube views are a leading indicator of retail sentiment. Of course, most people watching BitBoy's videos are new to the industry as the content is mainly price-related.
Crypto Apps ranking
My personal favorite of all crypto social statistics is the rankings of crypto-related apps in the App Store. The App store ranking is closely connected to the number of new downloads per app. That means when the Coinbase app is on the number one spot, it is the most popular app.
Let's take a look at the historic App ranking of Coinbase.
As you can see, Coinbase started at 400, rose to the top in early February, and sank to 200 again. Coinbase's popularity seems as volatile as altcoins.
While YouTube interest has been exploding since February, Coinbase downloads seem to go down - quite the opposite interpretation.
Analyzing crypto social stats is as important as on-chain analyses. While the latter is excellent for determining institutional demand, the former is ideal for determining retail interest.
That's why you should include both in your research and maybe create a habit of regularly looking at the charts. How has retail behavior changed in the US? Are they overly euphoric? Do we see all-time highs in download/Google search numbers?
For example, the DeFi vs. NFT Google search statistic suggests that we could experience an NFT bubble right now while DeFi lags. DeFi's growth could be more sustainable, while the NFT bubble could pop at any time.
No one knows for sure; however, all these indicators could show local tops and bottoms. They could even potentially provide an overall top signal.
It would help if you closely kept an eye on those metrics to be on top of the latest development.
All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.
Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value. Holding cryptocurrencies is risky.