Researchers from the Stevens Institute of Technology in Hoboken, New Jersey, led by assistant professor of information systems Feng Mai have proved that Bitcoin’s value can be manipulated by public sentiment. They said that the social media is “silently moving the prices of Bitcoin”, causing major fluctuations in the market.
They analyzed 3.3 million tweets and 344,000 posts which verifies for the first time that it is actually social media which is playing with the prices of cryptocurrency. Feng Mai, a professor at the Stevens School of Business, said that it is very possible for Bitcoin to be controlled by social media. In the press release, Mai stated that:
“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.”
During the study, the team collected positive and negative comments about the currency and compared it with the fluctuation of their market value. They also compared two month’s worth of twitter comments about cryptocurrency and other social media chatter along with two years’ worth of discussion on the Bitcoin Talk. They found resemblances and co-ordination between the two. The comments mirrored the value of the digital currency in the crypto market. Researchers stated that it is more of the “silent majority” and not the “vocal minority” that are moving the prices in the market.
The silent majority on social media are those who are not so frequently commenting regarding Bitcoin. The vocal minority, on the other hand, are the active users of social media that frequently comment about Bitcoin. Mai stated that:
“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,” said Mai. “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.”