You know that moment when you’re mindlessly scrolling through Twitter, half-thinking about getting some actual work done? Yeah, that was me last week. But instead of a typical doomscroll session, I got a notification from a Twitter account I followed years ago—a crypto project I’d pretty much written off.
Back in the day, this project seemed promising, something I genuinely believed in. But like so many others, the original dev team packed up, and the whole thing faded away, eventually getting de-listed from exchanges about a year ago. But now, a decentralized team has stepped in and is building on the project. My first reaction was, “Why am I still following this?” My second reaction? “Blue Pill or Red Pill?”
Naturally, I took the Red Pill and decided to go waaaayyy down the rabbit hole….. I lose track of time for a few days and next thing I know, I have a cool formula for valuing crypto and even a name to go with it… how did I get here? Glad you asked…
The Rabbit Hole Begins
Curiosity got the better of me, and before I knew it, I was neck-deep in research on this forgotten crypto project. I checked the price— dirt cheap. Yet, there was a persistent thought in the back of my head: is this a total waste of money or the buy of a lifetime?
I researched everything: the coding, the original team’s whereabouts, the blockchain’s current backers, and how its technology stacks up against the competition. I was completely lost in the weeds.
Then, a buddy of mine drops a line about “network theory”, or Metcalfe’s Law, predicting Bitcoin’s price. Sounded like total BS—until he showed me a chart. The dang thing was freakishly accurate!
The theory shows that the more PEOPLE that are connected within a network, the more EXPONENTIALLY VALUABLE that network becomes. This is incredibly interesting because this means that a network of 300 people is NOT three times as valuable as a network of 100 people……but it is 9X MORE VALUABLE
(Here’s the exponential math…. 3002 =90,000, which is 9X compared to 1002 = 10,000)
This is also the same theory that nearly perfectly explains the exponential growth of people connecting to the internet from the 1990’s until 2016….but that is a story for another article.
As I got more into “network theory”, I wondered if this could apply to the crypto project that I was trying to value.…
The Twitter Revelation
Here’s where things got interesting: trying to plug in the right numbers for network participants was a nightmare. How do you measure that? What even counts? Then it hit me—what if the only input that matters is the number of Twitter followers?
I dove into CoinMarketCap.com and started pulling data. I randomly chose 30 active crypto projects, ranked them by their Twitter followers, and compared that to their total market value.
And here’s the kicker—there was a clear relationship. The more Twitter followers a project had, the higher its market cap seemed to be. Check out the table I whipped up:
A Formula Worth Its Salt
After looking at more complex math than I ever wanted to, I stumbled upon a logarithmic regression that could predict the market cap based on Twitter followers. It’s not going to win a Fields Medal, but it does a pretty good job of predicting.
The chart below shows how this formula lines up with actual market caps. The line on the chart is the Market Cap in $USD that the formula would predict for each of these projects, based on the number of Twitter followers for the project. The dots on the chart are the actual values of the projects.
Seems to work pretty well!
There is clearly a relationship between the number of Twitter followers of a crypto project and the value of the crypto.
(Chart is in Logarithmic Scale)
For you math nerds, here is the predictive formula.
I have named it the “Twit-Token-Transformer” or “TTT” for short (why?…. well, why not?):
$USD Market Cap of a Crypto Coin = 0.565 x (Twitter Followers)1.67
Take the number of Twitter Followers on the official site for the crypto project to the exponential power of 1.67 and then multiply that result by 0.565. The result is the total Predicted Market Cap in $USD for the project. If you want the predicted coin price, just divide the result by total # of coins in existence.
Applying the “TTT” Formula
Now, back to that notification that started all of this. I finally plugged in the number of Twitter followers of that forgotten project, (called AION, if you are curious), into my shiny new formula—64,000 followers. The result? The project should be worth about $60 million in total market cap, or roughly $0.11 per coin.
But wait….the project’s market cap is barely $1 million, and it’s trading way below a penny per coin (more like $00.002). Yet, when the project was active, it easily traded around $60 million, or $0.11 per coin. So, what gives?
Well, the 30 projects I used in my analysis were ACTIVE projects with development and all of them were trading on exchanges. It seems there’s potential for AION, but the project needs active development and exchange listings to fit the formula.
AION is just now restarting, so for $60 million or $0.11 per coin to be a valid project value, it has to continue to be an ACTIVE project. The team is going to have to show development and have more places where Aion can be traded.
I don’t see much activity on their Twitter page BUT I do see activity on their TELEGRAM channel. It appears they are now working on new development and also exchange listings. Since their TELEGRAM site is used more than the Twitter site, I checked my new formula against Telegram users. Here is what I found….
Telegram: The Unsung Hero
From various sources, I discovered that, in general, Telegram subscribers are actually MORE engaged than Twitter followers. For the 30 crypto projects that I examined, each Telegram subscriber was worth, on average, about 16 Twitter followers. So, a TELEGRAM channel with 1,000 subscribers is as valuable as a Twitter page with 16,000 followers. Applying this to AION, its Telegram channel has 3,300 subscribers—equivalent to having about 53,000 Twitter followers.
Plugging that into my formula still puts the market cap at $45 million, or $0.09 per coin.
I would expect that as the AION team continues the re-launch of the project, they will also add more followers on Twitter and Telegram, so it seems reasonable that the project is $45 million to $60 million in value, or $0.09 to $0.11 per coin, or approximately 45X to 60X the current value.
The Takeaway
So, what’s the moral of the story? While the Twit-Token-Transformer (TTT) doesn’t claim to be the ultimate method for valuing crypto (though it is pretty good…), there’s enough of a correlation between social media followers and market cap to suggest that maybe—just maybe—the only thing that really matters to your crypto’s value is how many people are following it on Twitter (and also to a degree, Telegram).
Of course, outliers and exceptions exist, but in this wild west of digital currencies, sometimes it’s the simplest metrics that tell the most interesting stories.
So, next time you’re weighing whether to HOLD or sell, take a quick peek at the Twitter and Telegram follower count. It might just tell you more than any whitepaper ever could.
About The Author
 | Derek Lorian is a seasoned software developer who founded and successfully grew his own software company, which he recently sold. Now enjoying semi-retirement, Derek has turned his focus to investing and writing, particularly in the cryptocurrency space. He enjoys approaching articles on subjects that engage his deep technical background along with a sprinkling of his dry humor. |
