The on-chain analytics company Santiment has highlighted the probable reasons for the recent corrections in Dogecoin and Apecoin. These corrections have coincided with significant trends in social media sentiment indicators, specifically pointing to Fear Of Missing Out (FOMO) as a driving force.
Santiment, in a recent post on social platform X, disclosed that Dogecoin and other memecoins have experienced an increase in the Positive Sentiment vs. Negative Sentiment Ratio. This metric is designed to assess the overall tone on major social media platforms, indicating whether they lean more positively or negatively regarding specific assets at the moment.
The measurement utilizes a sophisticated machine-learning model, developed to distinguish between negative and positive sentiments in online comments. If the indicator's value surpasses zero, it signifies a dominance of positive sentiment over negative sentiment in social discussions. Conversely, a value below zero suggests a prevailing negative outlook.
Santiment has released a chart detailing the trends in this sentiment ratio over recent months for four specific assets. Notably, spikes in positive sentiment for Dogecoin and Apecoin were observed. These upticks, identified by Santiment, corresponded with local peaks in the prices of DOGE and APE. This pattern was similarly observed in other memecoins, GIGA and GOAT, albeit their peaks preceded those of Dogecoin and Apecoin.
While a positive sentiment often signals confidence within market circles, excessive optimism can lead to unrealistic hype. Historically, such exuberance has precipitated price peaks not only in memecoins but across various cryptocurrencies. Santiment succinctly explains: market prices often move contrary to popular expectations, with extremes in either bullish or bearish sentiments tending towards predictability in market behavior.
The recent outburst of positive sentiment likely fueled FOMO among investors, resulting in the corrections witnessed for Dogecoin and its peers. Observing fluctuations in the Positive Sentiment vs. Negative Sentiment Ratio in the days ahead could therefore offer insights into potential price movements, as any decrease might signal a revival in bullish activity.
As of late, Dogecoin's price neared the $0.150 mark. However, subsequent corrections brought it down to approximately $0.136, aligning with the mentioned sentiment dynamics.