Crypto’s most hated rallies may have confirmed the bull market 

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Cryp­to mar­kets are noto­ri­ous­ly fick­le. Round here, fun­da­men­tals don’t pow­er prices to the same degree as stocks — val­u­a­tions instead tend to reflect a sick­ly mix of vibes, cult of per­son­al­i­ty, and memes.

Invest­ing in and trad­ing cryp­to is murky as a result. Active users, fee gen­er­a­tion, total val­ue locked or even devel­op­er counts are all met­rics that should mat­ter. But they real­ly don’t.

Sen­ti­ment is king, and high cor­re­la­tion between dig­i­tal assets means that when things are bad for bit­coin, then the rest of the mar­ket almost always suffers.

It’s no won­der, then, that the con­cept of “hat­ed ral­lies” has emerged as our cur­rent bear cycle shows signs of let­ting up. The idea is that the more hat­ed the cryp­to, the more like­ly it is to pump hard as alt­coin sea­son sinks in.

Take Solana (SOL), which has attract­ed haters from the Vita­lik-maxi crowd ever since it was dubbed an “Ethereum killer” some­time around 2018. Like Ethereum, Solana sup­ports apps, NFTs, sta­ble­coins and tokens, but with about 100 times the throughput. 

Cryp­to purists — eager to hate on Solana — could argue the net­work is more cen­tral­ized than Ethereum on account of its low­er node count (around 2,900 to 7,700) and sup­pos­ed­ly high costs asso­ci­at­ed with spin­ning up a val­ida­tor node.

Bit­coin diehards, on the oth­er hand, would already sim­ply shit on Solana for run­ning an ini­tial coin offer­ing in the first place. (Its del­e­gat­ed-proof-of-stake con­sen­sus mod­el doesn’t do it any favors with the Orange Coin crowd, either.)

Solana hate from the Ethere­ans and Bit­coin­ers was aug­ment­ed by even the fringes of the cryp­to space when FTX went kaput. Now-con­vict­ed fraud­ster Sam Bankman-Fried was one of Solana’s most obnox­ious back­ers, hav­ing bankrolled sig­nif­i­cant chunks of the Solana ecosys­tem from the ground up.

Cryp­to mar­kets are prov­ing how thin the line between hate and love

Solana is one of the best per­form­ing top-100 cryp­tocur­ren­cies this year after ral­ly­ing more than 400%, going from under $10 to more than $56. SOL has more than dou­bled in the last month alone. 

SOL would still need to mul­ti­ply three-and-a-half times to hit its all-time high set in 2021. But for all its haters, Solana has eas­i­ly out­stripped the top two: ETH has gained about 70% over the year to date, BTC about 120%.

Oth­er recent “hat­ed ral­lies” include Ter­ra Luna Clas­sic (LUNC) — the same cryp­tocur­ren­cy at the heart of Do Kwon’s mag­nan­i­mous­ly flawed algo­rith­mic sta­ble­coin empire. LUNC was good for a 40-plus-per­cent one-day ral­ly late last week. 

The new edi­tion LUNA token, now spear­head­ed by the Ter­ra com­mu­ni­ty with­out Kwon, pushed 73% high­er on the same day, while FTT, the once-native token for Bankman-Fried still-bank­rupt cryp­to exchange FTX, doubled. 

Even the floor price for Bored Ape Yacht Club NFTs is up more than 60% since its August lows, going from $37,000 to more than $60,000. For scale, the S&P 500 is up 2% over the same period.

Does all this mean more haters con­vert to big­ger price pumps? After pulling sen­ti­ment read­ings from data ser­vice provider The Tie, I’m not total­ly convinced.

The Tie record­ed long-term neg­a­tive sen­ti­ment for near­ly two-thirds of cryp­tocur­ren­cies in the top 100 by mar­ket cap, which aren’t sta­ble­coins, wrapped or oth­er­wise staked tokens. Only about a quar­ter of those have out­per­formed bit­coin over the year so far.

East-West con­nect­ing Conflux’s 640% jump leads the group along­side Solana, FTT and THOR­Chain, which has quadru­pled since January.

At the same time, about a quar­ter of the top 30 or so cryp­tocur­ren­cies with pos­i­tive sen­ti­ment at the start of the year have beat­en BTC. That includes MakerDAO’s 160% ral­ly and Injective’s mon­strous 1,100% push.

(Erik Saber­s­ki, vice pres­i­dent of data sci­ence at The Tie, told me the long-term sen­ti­ment is cal­cu­lat­ed by col­lect­ing Twit­ter posts about cer­tain cryp­tocur­ren­cies and mea­sur­ing how pos­i­tive or neg­a­tive they are. It’s a “sim­ple approach com­mon­ly referred to as “bag of words,” where each word has a sen­ti­ment score: some neg­a­tive, some pos­i­tive. The over­all tweet is pos­i­tive if the words on aver­age are pos­i­tive; the neg­a­tive if the words on aver­age are negative.”)

The biggest ral­ly came from a cryp­to with pos­i­tive sentiment

The data sug­gests that neg­a­tive sen­ti­ment plagued most top cryp­tocur­ren­cies at the start of the year, with many flip­ping pos­i­tive after bit­coin recov­ered. All to be expect­ed giv­en how bru­tal this cryp­to win­ter has been. 

Of course, so many cryp­tocur­ren­cies with neg­a­tive sen­ti­ment this year have ral­lied hard — but because prac­ti­cal­ly all of them suf­fered from bad vibes, one shouldn’t read too much into it.

The data does show some­thing of the oppo­site. There’s cor­re­la­tion between neg­a­tive sen­ti­ment and poor returns: of the 60 non-sta­ble­coin-wrapped-or-staked tokens in the top 100 that have under­per­formed bit­coin, two-thirds start­ed out the year with neg­a­tive sentiment. 

ApeCoin, the token meant to one day be the heart of Yuga Labs’ Bored Apes meta­verse, is the clear­est case, down more than 60% with mod­er­ate­ly bad Twit­ter sen­ti­ment. Craig Wright’s BSV — which boast­ed the most neg­a­tive sen­ti­ment at the start of the year of any cryp­tocur­ren­cy ana­lyzed — is anoth­er, hav­ing risen only 20% while the rest of the mar­ket popped.

So, it could be tempt­ing to base port­fo­lio deci­sions on how hard haters hate. But it’s prob­a­bly best to stick to some oth­er tried-and-test­ed met­ric — like oh, I don’t know, astro­log­i­cal alignment?

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