Social media discussions play a crucial role in influencing crypto returns: Study
The researchers also determined that “news sentiment” is a much less effective predictor of cryptocurrency returns. Researchers at Pennsylvania State University recently analyzed whether attitudes and emotionality surrounding cryptocurrency could help predict returns. What they found may stand in stark contrast to related financial markets. According to the team’s research paper, social media plays an outsized role in adoption and activity rates, while crypto currency journalism isn’t a great predictor of market movement: “Our findings indicate that social media sentiment significantly predicts crypto returns, while sentiment from news media does not.” The researchers used natural language processing to analyze millions of financial news articles and social media comments and generated sentiment scores along 53 topics and attention metrics for over 300 crypto currencies. They then compared the ground truth returns over a given period of time to the coinciding news and social media ...