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- Professor Feng Mai proved that favorable social media remarks have a considerable effect on the pricing of bitcoin.
- Vocal social media users have a specific objective for advertising since they have invested in it.
- According to Mai, Bitcoin investors are aware of these possible conflicts of interest. As a result, the posts are readily dismissed.
It is thought that social media has the ability to influence bitcoin pricing. But… is this true? Bitcoin investors have increased their holding and value has risen in the last five years (and fallen, and risen again). More people are participating in this new money transaction revolution. But what causes emotion to become an action?
Stevens Institute of Technology researchers investigated what causes value up and down. They wanted to investigate if the value of Bitcoin could be controlled by public opinion. In other words, are social media posts and bitcoin prices connected in any way?
Positive comments on social media have a huge impact on the price of Bitcoin
Professor Feng Mai proved that favorable social media remarks have a considerable effect on the pricing of bitcoin.
The “silent majority” holds the most power. It’s the ones who don’t constantly talk about Bitcoin but are important. Comments, tweets, and blogs from individuals who can’t stop talking about Bitcoin had no effect.
Their comments have had no effect on the price of Bitcoin in the least.
But what about the seldom commentators? Things happen when they take time to debate about Bitcoin and its movements, as well as when they project the future. They have 10 times the power to affect prices than folks who can’t remain silent.
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“It’s them that investors keep an eye on”
This was the first conclusive statistical showing that social media and Bitcoin prices are indeed connected. Positive mood impacts Bitcoin prices, which may seem counterintuitive.
Vocal social media users may have a specific objective, in this example advertising or raising the price of Bitcoin since they have invested in it.
As a result, if the majority of social communications posts about Bitcoin are created by biassed individuals, the feelings on social media may not correctly represent the currency’s true worth.
social media and Bitcoin values are related
- According to Mai, Bitcoin investors are aware of these possible conflicts of interest. As a result, the posts are readily dismissed.
Over the last four years, the value of a single Bitcoin has risen from around $500 in 2014 to a current value of $6,000, and it has found its way into virtually every form of financial transaction, from purchasing phone credits to shopping for clothes online. Now, researchers headed by Stevens Institute of Technology demonstrate that the value of Bitcoin may be affected by public mood, confirming for the first time that social media and Bitcoin values are related — but not without a surprise.
The study, led by Feng Mai, a professor at Stevens’ School of Business, demonstrates that periods of increasingly favorable social media discussion do, in fact, have a considerable impact on Bitcoin’s rising price, but the surprise? It is the silent majority, not the loud minority, that drives change.
- In other words, comments and tweets from extremely active users have little effect on Bitcoin’s price. Instead, the silent majority — regular users who took the time to comment on the cryptocurrency’s prospects – affected prices more, up to 10 times more, when they made favorable comments.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
