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.
Source: Sanbase
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.