29 Jun Social media ‘silent majority’ influences bitcoin prices more than ‘vocal majority’
A new study led by a Stevens Institute of Technology researcher says noisy, high-profile social media influencers may not have as much impact on bitcoin prices as the “quiet majority.”
The paper titled “From Bitcoin to Big Coin: The Impacts of Social Media on Bitcoin Performance”, reviewed more than 344,000 posts over two years on Bitcoin Forum, an active social media channel for bitcoin followers. As well, 3.4 million tweets on Twitter over two months were analyzed.
Comments on social media were classified into positive, negative and other sentiment categories. Changes in bitcoin’s prices during the same timeframe were compared.
Researchers recognized that bitcoin’s price can also affect sentiment and so other factors such as the S&P index, gold prices and volatility indexes were also factored into the analysis.
Finally, social media commentators were segmented into frequent posters and a “silent majority” who were much less active on the two social media channels analyzed.
Bitcoin price manipulation is still possible
The research project for the first time shows a direct relationship between and the price of bitcoin.
“Interestingly, social media’s effects on bitcoin are driven primarily by the silent majority, the 95% of users who are less active and whose contributions amount to less than 40% of total messages,” wrote researcher Feng Mai.
Mai’s research shows positive social media coverage does significantly influence the rise of coin prices. It’s just that the silent majority have more impact than the noisy minority.
“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.”
Investors and analysts need to recognize the potential for bias and discount those comments accordingly.
“The silent majority are the real influencers in driving the value of Bitcoin,” says Mai. “It seems like investors get that.”
How investors can benefit
The research showed the impact of tweets was evident within an hour while forum posts took as long as a day to show an impact on prices.
“To leverage the effects of social influence on bitcoin markets, investors should actively follow the most influential people in a social network to collect market information much more efficiently. However, the power of the silent majority should not be ignored, as we show that their sentiments can be the more important metric in predicting the movement of future prices,” the report noted.
You can view the entire research paper “From Bitcoin to Big Coin: The Impacts of Social Media on Bitcoin Performance” here.