Researchers from Stevens Institute Of Technology recently published a paper which verifies social media’s effect on Bitcoin. Researchers show that Bitcoin's value can be manipulated by public sentiment.
The study was led by Professor Feng Mai who was interested in proving his hypothesis that periods of increasingly positive social media commentary significantly influence the rising price of Bitcoin. However, there is a twist in this story. The study shows that it ’s the silent majority, not the vocal minority, who are the most significant influencer of these prices.
To put it simply, comments and tweets from very active users did not move Bitcoin's price much, rather, the infrequent users who took the time to comment on the cryptocurrency's prospects moved prices as much as ten times more.
The Methodology Of The Study
Mai’s team collected and analyzed two years' worth of forum posts on the world's most popular public Bitcoin forum, Bitcointalk. The team classified comments into positive, negative and other sentiment categories using natural-language processing techniques. They also collected two months' worth of Twitter data, including more than 3.4 million tweets about Bitcoin.
They then compared changes in Bitcoin's price with the chatter around the cryptocurrency. But just as chatter can affect the price, Bitcoin's value can affect the sentiment around it, so the team also factored in daily rises and falls in indicators such as the S&P 500 stock index, gold prices, and volatility indexes to better understand the two-way relationship.
The team went a step further by dividing Bitcoin tweeters and posters into two groups: those who were posting very frequently and those who were not in order to see what kinds of commenters affect prices most. They found that rather than the vocal users driving changes in Bitcoin price, the price instead changed in proportion to the comments made by users who were infrequent posters.
Mai commented on the study by saying
“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.”
Bitcoin Price & Social Media Value Effect Conclusion
The silent majority are the real influencers in driving the value of Bitcoin. So, if you find yourself lurking on forums thinking the posts that you are reading is influencing the ecosystem. This study by Stevens Institute Of Technology shows that you are the real influencer.