Dec 17, · Today’s Social Media Influence Today, Bitcoin is a global phenomenon and you can track its exponential rise on several more social media platforms. Now, users on Facebook, Twitter . There’s a rather unhealthy obsession going on with price in the Bitcoin market. Speculators are everywhere, particularly on social media where a few good calls can grow your audience . Recently the Stevens Institute of Technology conducted a study along with three other universities – Dickinson College, Ivey Business School, and the University of Cincinnati – on how social sentiment affects Bitcoin market prices. The study analyzed million tweets and , Bitcointalk .
Social media market bitcointalkSocial Media 'Silent Majority' Predicts Bitcoin Market - bitmoneylab.de
Regardless, the insights gained are certainly food for thought. Social sentiment definitely plays a role. A more thorough study that covers both the bull and bear cases in Bitcoin over a longer period should give traders and investors alike greater confidence in the future. An alternative and longer reaching approach conducted by professor Feng Mai at the Stevens School of Business gives some additional insights. Mai, working with a team from several universities, collected two years worth of data from Bitcointalk and two months worth of data from Twitter.
The research team programmed a script to collect comment data and sort it into positive, negative, and other sentiment categories.
Using a statistical method known as vector error correction, or VECM, they then compared the price of Bitcoin with the cryptocurrency buzz generated by the two social media platforms. The four-strong university project also accounted for other traditional economic markets like shares, gold, and volatility indices to provide a more balanced picture of events.
Mai further noted that:. The study concluded that social media influence does, in fact, affect the price of Bitcoin significantly. No doubt, some members of the cryptocurrency community will argue that the outcome was obvious. That said, probably no other statistical study has been carried out at a such a high level and further validates what savvy investors have been thinking all along.
To date, crypto has largely been a retail investor phenomenon. Social sentiment generally plays a bigger role when there are only small fish in the pond. What happens when the big fish show up? Take for example the latest buzz around institutional money flowing into the crypto space. If the rumors are true then social sentiment may not be as relevant when the flows start to happen.
What moves markets is capital. And lots of it. Institutional investors are already using OTC to enter the Bitcoin market. Unless wealthy investors are actually tweeting their trades, no amount of social media research will actually give you any clues on price trends.
That does, of course, mean in theory that social sentiment indicators could be more accurate for altcoins with decent liquidity. Sentiment has played a role in traditional markets for ages. The game has changed however and is constantly evolving with the influx of new channels. Social media is generally the playground of the youth. Reddit, Snapchat, Twitter, Facebook, Telegram, the list almost never ends. Pundits and researchers everywhere will continue to stake the holy grail of all claims — market prediction.
Unfortunately for them, and perhaps more fortunately for everyone else, markets cannot simply be boiled down to equations and algorithms.
They also tested for the type of sentiment, bullish or bearish, or positive and negative. The implications are that FUD fear, uncertainty, and doubt is less substantial than FOMO fear of missing out and that those who post on social media about Bitcoin market speculation frequently will be regarded by the community as having an agenda without much effect on the market.
Investors are becoming savvier at deciding whose opinions to trust, but still remain overly optimistic when it comes to emotionality. Does social sentiment factor into your market analysis? Let us know in the comments below! Could you be next big winner? I consent to my submitted data being collected and stored. Treasury, looking to decrease the reporting requirements Belarus has become a hot ground of the great Bitcoin experiment as the country dwells into one of its most disturbing civil crisis.