Cryptocurrency and the Impact of Twitter

Twitter is one of the world’s best known social networks. Last year, the site generated revenue of over $5 billion, and as of April 2022 it has been purchased for $44bn by prolific cryptocurrency influencer Elon Musk.

One of the most talked about topics on Twitter is cryptocurrency, with many users taking to the social network to discuss their crypto ventures and views. As a result, cryptocurrencies regularly trend on Twitter, with investors often heading straight to the site whenever they have a question or comment to make about digital currencies. But have you ever wondered how much of an impact these conversations really have?

Does Twitter really hold all the power when it comes to determining cryptocurrency market prices, or is it those same fluctuating prices that are getting people talking, causing cryptocurrency topics to continue to trend? Our research team wanted to find out, so we analysed conversations on Twitter from January 2021 to January 2022, to see how influential tweets could really be. Here’s what we found.

Summary

Analysis completed by our research team found that sentiment towards cryptocurrencies on social media was intrinsically linked to how they were valued in real terms at a given time.

The period which came under scrutiny in this research showed a number of significant leaps and drops in the valuation of currencies, with opinion on social media changing quite dramatically both before and after these fluctuations.

Announcements such as the one made by Elon Musk regarding Tesla’s acceptance of payment in the cryptocurrency Bitcoin have often made digital currencies the talk of Twitter, and user sentiment has tended to directly reflect price fluctuations throughout the period of research.

Our research found:

  • The most disliked cryptocurrency was Ethereum (29% negative)
  • Dogecoin was the most popular currency (94% positive)
  • Cryptocurrency price fluctuations are being led by retail investors
  • Pivotal moments in digital currency evolution tend to result in a rise in both positive and negative tweets

Read on for our full analysis of the link between the positivity of tweets regarding digital currencies and their valuation from January 2021 to January 2022.

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