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How To Spot Crypto Trends And Narratives Early

How To Spot Crypto Trends And Narratives Early

By Blackbeard XBT - 19-Mar-2024

Every crypto trader and investor wants to spot the next big trend or narrative early. This job is easier said than done, but with the right tools and mindset, hunting for new narratives does not have to be hard. Sharing tips and tools for spotting the “next big thing” in crypto is the goal of this article. 

What are narratives and trends?

Narratives are the stories or themes that drive a market. Trends are directional movements of the market over a certain period. Think of them like the popular kids in school – narratives set the trends, and the crowd follows.

Why should traders spot them early? The answer should be obvious. Spotting narratives and trends early can give an investor or trader the edge to become “one of the cool kids” before it’s cool. It's about being in the right place at the right time.

How do traders spot new narratives?

To be honest, it's all about staying informed. 

Reading the news is the first and easiest place to spot a narrative. Yes, even the traditional news can be useful to see what people are talking about. From artificial intelligence to frog and dog memes, these narratives and trends in crypto seemed to “come out of nowhere. Other recent trends like real-world assets and restaking are similar examples. 

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That was the narrative, and “the herd” follows the trends. 

After a trader thinks they’ve found a new narrative, spotting the trend is next. Spotting trends involves more analysis. Traders should look at trading volumes, price movements, and public interest over time. It's like watching the crowd. If they're starting to rush in one direction, that's where the trend is heading! Act quickly. 

What tools help to spot trends?

Explaining all the tools a trader can use to monitor trends deserves its own blog post. But here’s a quick look at some important tools. 

  • DeFiLlama: If a trader finds a narrative, they can check DeFiLlama and see TVL changes for protocols, which could confirm there is a new trend starting. 
  • Etherscan: This classic resource helps analyze the quality of a potential trending asset or category, including top holders, a deployer, and whether there are red flags or reason to believe a trend is brewing (e.g., quickly gaining new holders). 
  • X (f.k.a., Twitter): Traders who think they’ve found a new narrative should search social media to see who is talking about it! Usually, the fewer people talking about it the better. 
  • Dune Analytics: Traders can create dashboards to visualize data around an ecosystem, category, or specific asset they are monitoring.

Final Thoughts on Trends

So that's it! The basics of spotting narratives and trends in crypto are ready for readers to run with. 

Here are some final thoughts. 

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  • Narratives and trends can change quickly. It’s important to remember this and act on it, meaning no one should ever invest more than they can afford to lose. 
  • Some narratives have very short life cycles (e.g., 1 to 2 weeks). 
  • Not everything is a golden opportunity – watch for red flags.
  • If a trend or narrative sounds too good to be true, it probably is.
  • Catching trends is not an exact science, but anyone can be good at it with practice and diligence.

Hopefully this explanation helps readers understand how all these shenanigans work. If anyone reading this found it useful, feel free to share! 

This article is an adaptation of a thread written by the same author and posted to X (f.k.a., Twitter) here.