Over the last year and a half, the value of bitcoin has soared, allowing the cryptocurrency to be mooted as an eventual replacement for physical money. However, while that eventuality may never happen, we are learning more about how people interact with Bitcoin.
Indeed, a new study points to the currency being influenced by public sentiment. Researchers found positive comments on social media were able to change the prospects of Bitcoin.
Over the last four years, Bitcoin has enjoyed massive growth. In 2014 the value of a single bitcoin stood at around $400, but during last year it soared to over $15,000. Valuations have normalized since then, but a single coin is still work $6,000.
More importantly, Bitcoin has become increasingly popular in day-to-day transactions.
The research was conducted by the Stevens Institute of Technology and highlights Bitcoin’s value can be influenced and even manipulated by the public. This is the first time that a study has shown a direct link between social media and Bitcoin value.
Among the findings is a correlation between positive social media commentary in rising coin value. When there is a period of positivity on social media, the bitcoin value increases. Interestingly, it is the opinion of infrequent users that holds more sway.
Researchers found frequently active social media commentators on Twitter did little to influence the price. However, those who do fewer posts on the cryptocurrency can influence price when they post positives.
The study was done by compiling and analysing over two years of forum posts from the most popular Bitcoin-oriented websites and channels.
“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,” Mai said.
“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.”