Narrative Momentum
Pending BacktestIdentifies crypto sector rotations by tracking social media buzz velocity and buys lagging tokens in hot sectors.
Deep Dive
The Narrative Momentum strategy targets a uniquely crypto phenomenon: sector rotations driven by narrative attention. When a narrative (e.g., "AI tokens", "RWA", "DePIN") gains rapid social media traction, tokens within that sector tend to pump — but not simultaneously. The first-movers rally while laggards catch up hours or days later.
The strategy monitors social media velocity (mention counts per hour across Twitter, Reddit, and Telegram) for crypto sector keywords. When a sector's velocity spikes to 3x its baseline, the strategy identifies which tokens in that sector haven't yet moved and buys them, positioning for the "second wave."
This exploits the behavioral pattern that retail crypto investors tend to FOMO into narratives sequentially: they see the leader pumping, search for "what else is in this sector?", and pile into laggards — creating a predictable cascade of sector rotation.
The strategy cannot be backtested because it requires historical social media velocity data at hourly resolution — data that isn't available in standard market data sets. In production, it would use LunarCrush or similar social analytics APIs.
Key risks: narratives can fade as quickly as they emerge, sector classification is subjective (is Chainlink "oracle" or "DeFi"?), and social media manipulation can create false narrative signals.
Backtested on hourly OHLCV data across 65+ symbols from Jan 2020 to Mar 2025 — $10,000 initial balance — 0.1% commission — 0.05% slippage