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Outliers in the raw data preceded significant price movements for both AAVE and ALPHA: Coincidence?
Who knew what, and when did they know it?
Investigating Watergate in 1973, Senator Howard Baker Jr. wanted the answer. Thanks to a couple of journalists, he eventually got it. And while the stakes may not be as high, the team at Cointelegraph Markets Pro is pretty curious about some interesting crypto data this week.
The VORTECSā¢ Score includes sentiment analysis, tweet and trading volume, and price action as components of the algorithm ā which are then weighted according to a proprietary formula based on how similar these are to historical conditions.
If there is a similarity in these factors, the score will be higher when historical precedents have most consistently led to higher prices.
But while the score is algorithmically-generated, the raw data can sometimes tell a story too.
AAVE Idea
First off, hereās a chart of tweet volume for AAVE this week, charted against the price of the DeFi asset.
Tweets are obviously public information, but what are the chances that most retail participants in the crypto markets are able to absorb this outlier and analyze its meaning? The VORTECSā¢ Score can, however ā itās untouched by human hands, and since one of the components is based on the entire Twitter universe (most algos are only fed a subsection of the full firehose) it is essentially omnipotent when it comes to tweet data.
And sure enough, the VORTECSā¢ Score began to rise very shortly after this large spike in tweet volume, as seen in the chart below.
So whatās going on here? An AAVE Army arising to pump the token? Some kind of amazing news that only affected the price 24 hours later?
Well hereās the kicker for all those conspiracy theorists out there: this is pure coincidence. Plain and simple.
And in fact it all comes back to Elon Muskā¦ in a roundabout way. Because everything in crypto does these days.
On Saturday Night Live this week, which was hosted by the Doge fanboy, he participated in a sketch featuring the acronym āAAVEā, which appears to have resulted in a large volume of tweets concerning āAfrican-American Vernacular Englishā over the next couple of days.
In fact, even the Urban Dictionary tweeted about the acronym, though the tweet is (as might be expected from such an august website) NSFW. The showās co-head writer was accused of cultural appropriation as a result of using certain Black vernacular terms in the show, and as we all know, outrage drives social media.
Soā¦ hereās a fantastic learning moment for sentiment analysis in the crypto market: Proof that causation and correlation are not the same thing.
As it happens, AAVE (the crypto asset) did indeed soar following the uptick in Twitter volume for the term AAVE (an acronym). And although the VORTECSā¢ Score picks apart tweets using artificial intelligence to remove those that donāt fit the context that the algorithm is seekingā¦ perhaps this time it was fooled. But donāt worry ā Markets Pro will be filtering for this term in future.
Damn you, Elon Musk!
Alpha before Alpha?
Alpha Finance has no Musk connection (as far as we know) so weāre just going to treat this as a curious outlier.
The red arrow in the chart below shows an unusual pattern of reported trading for 24 hours which was followed by the price of ALPHA moving up by almost 50%.
It turns out Alpha Finance had some news of its own this week as the team announced on May 10 that theyād be launching an oracle aggregator.
Following this unusual pattern and the release of the news, the VORTECSā¢ Score began to rise too.
As is often the case when price rises, the trading volume soared in conjunction with price action. But the steep introduction to the May 9 outlier, and its equally steep decline, could lead one to believe that this was a trading bot being turned on and off again.
So why would anyone move the trading volume so significantly in advance of an important news storyā¦ and how would they time it so well?
Or in other wordsā¦ who knew what, and when did they know it?
Best returns from Cointelegraph Markets Pro live-tested strategies
The Markets Pro team has been tracking 42 possible strategies since the launch of the VORTECSā¢ algorithm on January 3rd 2021. Current top returns, as detailed in this document on the methodology used, are as follows:
Holding Bitcoin: 47% return
Holding Top 100 altcoins: 426% return
Best-performing time-based VORTECSā¢ strategy: 3,199% return
Best-performing score-based VORTECSā¢ strategy: 3,682% return
Cointelegraph Markets Pro is available exclusively to membersĀ on a monthly basis at $99 per month, or annually with two free months included. It carries a 14-day money-back policy, to ensure that it fits the crypto trading and investing research needs of subscribers, and members can cancel anytime.
Important Disclaimer
Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial advisor before making financial decisions. Full terms and conditions.
Disclaimer
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