V2 Predictions

The new V2 predictions analyze more quantitative social signals. In V1, the system uses only one source of social media data. In V2, the system looks at:

– Twitter followers increase
– Reddit posts increase
– Reddit subscribers increase
– Github commits increase
– Price increase
– Lagging correlation between twitter volume and price (V1)

The system then assigns an activity percentage, which is an average of the social signals.

The system also assigns a points value to the predictions, from 3 to 5 points. The more indicators are rising, the more points are assigned.

What is a lagging correlation?

0 to 0.5 means a weak positive lagging correlation
0.5 to 1 means a strong positive lagging correlation
-0.1 to -0.5 means a weak negative lagging correlation
-0.5 to -1 means a strong negative lagging correlation

Lagging correlation is used to analyze spot vs futures prices as well as social media volumes. For spot / futures prices, the spot price is considered the leading indicator and the futures price is considered the lagging signal. On a 1 minute timeframe, a lagging correlation coefficient of 0.5 or greater suggest a good probability that in the following minute, the lagging signal (futures price) will follow the direction of the leading (spot price). Our leading signals are mainly BTC and ETH spot prices, as most coins and tokens follow the bitcoin and ethereum price.

How does quantitative analysis work? Lagging correlation of social volume and price:

Google Trends can show you how often people searched for the term “bitcoin” in the last year: https://trends.google.com/trends/explore?q=bitcoin&geo=CA . This can give you an indication how how many people are interested a particular topic. This is quantitative data, meaning we are measuring a quantity of something. We measure social media volumes, which is another source of quantitative data.

When social media volumes increase for a particular coin or token, does this necessarily lead to an increase in price the next day? If it does, this is known as a positive lagging correlation between social media volumes and price.

A lagging correlation is when the price moves after the social media volume.

Lagging correlation is what the system looks for and will generate a coefficient between -1 and 1. A correlation coefficient of 0.5 or greater may indicate a good chance that the price will go up the next day. A negative correlation is the opposite, it means the price is more likely to go down.

For example, if you see a correlation coefficient of -0.5, there is a good chance that the price will drop the next day, even though the social media volume has increased.

What is social volume?

Social volume is the number of times a term is mentioned in a day.

We measure social volume using public data from Twitter. This can lead to some mixed results when several coins or tokens have the same symbol. For example, there are at least 4 tokens that use the symbol LOL.

When we look at social volume, we don’t know which of these tokens users are talking about. That’s a very challenging thing to do and we are thinking of ways it could be done. For the time being, you should know that there’s a bug, where the data being recorded will get messed up if CoinGecko adds a new token that has a duplicate symbol during the recording period. For example, the system wants to generate a 7 day graph for LOL, but on day 3, CoinGecko adds a new coin that also has the symbol LOL. This is rare but it can happen. A workaround was created where the CoinGecko coin-id is stored along with the symbol, so that the recording will continue with the first coin-id known to it. Although this should now be fixed for the daily predictions, the weekly predictions still have this issue. Duplicate symbols are an issue, so be extra careful when tokens don’t have a unique symbol. The majority of coins have a unique symbol though, so don’t worry!

Can you use quantitative analysis to make money?

Most day traders lose money, this is a fact. We do not recommend using this information to trade. The intended use is simply to learn which coins and tokens are rising in popularity and to discover new and interesting projects. We are not financial advisors and we do not recommend investing in any coins or tokens.