16 January 2024
Data shows the sentiment around XRP has taken a plunge following the failed attempt at a Bitfinex attack using the “partial payments exploit.”
XRP Weighted Sentiment Has Plunged To Negative Levels Recently
As explained by the on-chain analytics firm Santiment in a new post on X, the sentiment around XRP has turned negative. The indicator of interest here is the “Weighted Sentiment,” which itself is based on two other metrics: the “Sentiment Balance” and “Social Volume.”
The former of these basically keeps track of the sentiment currently present among social media users around any topic. The indicator calculates this score by going through social media posts and using a machine-learning model to separate between negative and positive sentiments.
The other relevant metric here, the Social Volume, measures the amount of discussion related to any given topic that’s happening on the major social media platforms right now. The indicator measures this by counting the total number of unique posts or threads making at least one mention of the topic.
Now, what the “Weighted Sentiment” does is that it takes the Sentiment Balance and weighs it against the Social Volume. What this means is that the Weighted Sentiment’s value would only register a spike when not only is the sentiment leaning towards one side, but the sample size of these posts is also large.
The below chart shows the trend in this indicator for XRP over the last few months:
When the Weighted Sentiment has a highly positive value, it means that there is a high amount of positive discussion happening related to the asset. From the graph, it’s visible that XRP saw such a bullish sentiment earlier in the month when its price made a recovery attempt.
Since then, however, the indicator’s value has plummeted for the cryptocurrency and is now floating deep inside the negative zone. Naturally, this implies that social media users are now bearish about the coin.
Santiment has noted that this sentiment, which is the most negative in years, has come for XRP as a failed Bitfinex hack attempt has taken place. During this attack, someone tried to make use of the “partial payments” system of the cryptocurrency to trick the exchange into thinking the transfer amount was greater than it actually was (equal to half the asset’s circulating supply, in fact).
Bitfinex, however, had the correct configuration in place to read transactions of this type, so the platform never fell for the exploit. Even though nothing ended up happening, the initial confusion naturally worsened the sentiment around the asset.
This negative sentiment, though, can actually be a boon in disguise for XRP, as historically, the price has tended to move against the expectations of the majority.
This might also be the reason that the recovery attempt earlier in the year failed, as traders got too hyped too quickly. Since the sentiment is completely opposite now, perhaps a price surge might have an easier time growing up.
XRP Price
Since the asset’s failed recovery attempt, XRP has been moving mostly sideways, as it currently trades around the $0.576 level.