Research Correlates Bitcoin Price to Social Media Opinions

A recently conducted research suggests a correlation between social media presence and Bitcoin’s price fluctuation, as results show that positive feedback from infrequent social media users coincides with the enhancement of the coin’s prospects.

According to a research led by assistant professor of information systems Feng Mai from the Stevens Institute of Technology in Hoboken, New Jersey, there appears to be an indirect link between Bitcoin’s value and public sentiments, as findings indicate that positive social media commentaries seem to manipulate the coin’s market behavior, a theory that has long been argued among the crypto community.

As Mai noted in a press release:

“This was the first robust statistical finding to verify that social media and Bitcoin prices are actually linked. It may be intuitive, but positive sentiment moves Bitcoin prices.”

Based on research findings, the period in which Bitcoin’s social media reception has been increasingly positive is on par with its price escalation. The data gathering procedure involved using natural-language processing techniques to segregate the feedback into “positive,” “negative,” and “other” categories.

Two month’s worth of Twitter data and over 3.4 million Bitcoin-related tweets were collected as a sample for the study. The changes manifested by these data were then compared with Bitcoin’s market behavior to determine whether or not there is a significant correlation. To further support the findings, the study also analyzed more than two year’s worth of forum comments from one of the world’s most popular Bitcoin forum, Bitcointalk. As results indicate, the opinions of the “silent minority” appear to hold more weight on Bitcoin’s price compared to the “vocal majority’s” impact.

As the study suggests, Tweets posted by the vocal majority seem to have a very minute influence on Bitcoin’s price. However, posted comments of those defined as infrequent users appear to sway prices more, as Bitcoin’s market value coincidentally inflates ten-folds whenever a positive feedback from the silent majority was published.

To further strengthen this correlation, the research also factored in other variables, including Bitcoin’s daily fluctuation and volatility, as well as other indicators that may potentially contribute to Bitcoin’s value, including stock indices and gold prices.

Notably, not only did the research establish a correlation between Bitcoin’s price and social media commentaries, but also identified which and whose comments bear more influence on the coin’s market behavior.

As Mai concluded:

“Vocal users of social media may sometimes have a certain agenda, in this case hyping or boosting the price of Bitcoin because they themselves have invested in it. So, if most of the social messages around Bitcoin are generated by people who are biased, the sentiments on social media may not accurately reflect the currency’s actual value.”