Social volume is an indicator created by Sanbase which shows the amount of mentions of the coin on 1000+ crypto social media channels, including Telegram groups, cryptocurrency subreddits, Discord groups, private traders chats and more.
The social volume metric is a useful complement to trading volume and on-chain metrics. An increase in social volume does not necessarily tell you which direction a coin will move, but a sharp rise does indicate that increased volatility is on the horizon.
You can also use divergences between social volume and the price of a cryptocurrency to identify turning points in the market. For instance, the chart below shows the price of bitcoin and its social volume.
As shown above, the bottoms are closely aligned with spikes in social volume. We also see that during late October-early November, social volume spiked and the price went onto a new high, but then there was a divergence between social volume and the price. As social volume fell, the rally faltered and bitcoin’s price started to fall as well.
We also see a huge spike in social volume, which preceded bitcoin’s large drop during Black Thursday. The spike in social volume indicated a continuation of the downward trend, and another spike is visible as bitcoin bottomed out near $3,800.
To summarise, social volume is a useful tool which provides more reliable signals when combined with on-chain and volume analysis.