Dogecoin & Co. Take Over Social Media: Why Memecoin Frenzy Is Bad For Bitcoin

6 days ago 3

Data shows Dogecoin and other meme coins are receiving a significant amount of attention on social media, a sign that may not be ideal for Bitcoin.

Top 6 Memecoins Have Seen Their Social Dominance Rocket Up Recently

In a new post on X, the analytics firm Santiment has discussed about the trend in the Social Dominance for a few different subsections of the cryptocurrency sector.

The “Social Dominance” here refers to an indicator that basically tells us about the mindshare that a particular asset or a group of coins has on the major social media platforms right now.

More formally, the metric’s value is calculated as a percentage of the discussions related to the top 100 cryptocurrencies by market cap that the given asset is making up for.

To determine this, the indicator collects posts/threads/messages available on five platforms: X, Reddit, Telegram, 4Chan, and BitcoinTalk. It then filters them for the keyword in question.

Note that for measuring the “discussion,” the metric simply counts up these posts containing at least one mention of the asset, rather than counting up the mentions themselves. The advantage of this methodology is that outlier posts containing hundreds of mentions don’t skew the data.

Now, here is the chart shared by the analytics firm that shows how the Social Dominance related to three subsections of the market has changed over the last few months:

The three segments in question are the layer 1 top six, the layer 2 top six, and the memecoin top 6. “Layer 1” networks refer to the primary blockchains that handle their own security, like Bitcoin and Ethereum. Networks like Polygon that are built on top of these chains are known as “layer 2.” Naturally, the meme coins refer to the popular meme-based tokens, like Dogecoin and Shiba Inu.

From the graph, it’s apparent that the Social Dominance of the layer 1 top 6 had rocketed up a couple of days back as a result of Bitcoin setting multiple new all-time highs (ATHs).

BTC has continued to explore new highs since then, but it appears that the focus of social media users has shifted elsewhere, with the Social Dominance of the layer 1 giants witnessing a cooldown.

The indicator has stayed relatively low for the layer 2 coins throughout this, implying the traders haven’t been caring much about them recently. The assets that have hogged all the attention have been the memecoins, who have just seen their discussion hit a new record.

The reason behind this high interest in these tokens is the impressive rally that Dogecoin has seen over the past week, leaving the rest of the sector in the dust after amassing profits of more than 104%. If the past is anything to go by, though, this outperformance may not be such a good thing.

“Historically high speculative asset social dominance typically indicates greed and emotional trading,” notes Santiment. Assets in the cryptocurrency sector tend to move opposite to the crowd’s beliefs, so greed is something that has generally led to tops for the market.

As such, it’s possible that a shift in focus away from Dogecoin may have to happen, if Bitcoin and others have to continue their bull run.