Social Scores

Quantifying Narrative-Driven Price Impact...

The Social Score is a proprietary composite index designed to quantify the short-term market impact of unique social discourse. It moves beyond simple mention volume to identify conversations that possess both reach and financial consequence.

The score is algorithmically computed as:

Social Score = (Unique Social Volume for Timespan) × (24-Hour Percentage Price Change)

Deconstructing the Formula:

• Unique Social Volume (USV): This foundational variable represents the deduplicated count of unique authors/entities mentioning a specific asset within a set rolling window. By filtering out bot activity and spam, USV serves as a purified measure of genuine, organic community engagement.

• 24-Hour Percentage Price Change: This is the net asset price return over a 24-hour period, serving as the quantitative measure of market reaction.

Interpretation and Utility:

A high Social Score indicates a powerful confluence: a significant breadth of unique community engagement is correlating with a substantial price movement. This allows researchers to:

• Identify High-Impact Narratives: Distinguish between mere "noise" (high volume with low price impact) and potent "signals" where social activity is a leading or coincident indicator of price volatility.

• Gauge Narrative Strength: The magnitude of the score provides a quantitative measure of a narrative's current market influence. A rising score can signal an accelerating trend, while a divergence (e.g., high volume with stagnant price) may suggest trend exhaustion.

• Perform Cross-Asset Comparison: The standardized score allows for the direct comparison of social-market impact across different cryptocurrencies, identifying which assets are currently dominating the social-financial landscape.

Hence, Social Score transforms two isolated data points—social chatter and price action—into a single, powerful heuristic for assessing the tangible financial impact of community sentiment.