How Big Is The Influence Of Social Media Giant Reddit In The Crypto Industry?
Reddit has been a user-driven forum for discussions on a plethora of topics, stemming from its creation in 2005. When cryptocurrency entered the industry over a decade ago, it became one of the largest forums for crypto fan and critics alike. The rise and fall of prices have led subscribers both towards and away from the subreddits of particular coins, which has brought up a question from LongHash, concerning the correlation between the “big crypto subreddits” and the “realities of the market.”
To be clear, the investments that someone makes should not be based on the user counts that Reddit provides, and the decisions for investments should be based on the research and judgment of the investor.
The data collected by LongHash was based on the top 20 cryptocurrencies listed on CoinMarketCap on March 13th. The market cap of each individual above comes from a fraction of that total. Then, LongHash evaluated the Reddit users of each of these 20 coins, combining that data with information from CoinMarketCap.
In the chart that LongHash provides, they deducted the market cap percentage from the subscriber percentage, finding the difference between the two. The pink bars show that the number is smaller than expected, based on the market cap, while the blue bar shows the opposite information. For example, Reddit subscribers made up 16% of the total for Ethereum, while the market cap of the crypto asset accounts for 11.7% of the total, which means it has more Reddit fans than expected. This is under LongHash’s assumption that the followers on Reddit “perfectly mirrored the market.”
Overall, the followings on Reddit give a fairly close association with what the market cap would suggest for each coin. The largest discrepancy is Bitcoin, but there are multiple factors that could contribute.
When using this type of data, it should not be applied to any serious analysis in investment decisions. It is relatively easy to purchase a user account and subscribe many of them to a single community for seemingly larger numbers. The overlap with Reddit is substantial, especially with Bitcoin.
Even though the idea of applying this data is not quite scientific, the followings on these subreddits have fairly close numbers to the market right now.