How social media’s powerful ‘silent majority’ moves Bitcoin prices
In the past four years, the value of a single bitcoin has soared from approximately $500 in 2014 to a current value of $6,000 and has worked its way into every type of ¿nancial transaction, from buying phone credits to shopping for clothes online.
Now, researchers led by Stevens Institute of Technology show that Bitcoin’s value can be manipulated by public sentiment, verifying, for the ¿rst time, that social media and Bitcoin prices are linked — but not without a surprise, phys.org wrote.
The work, led by Feng Mai, a professor at Stevens School of Business, shows that periods of increasingly positive social media commentary do, in fact, signi¿cantly inàuence the rising price of Bitcoin, but the surprise? It’s the silent majority, not the vocal minority, who move these prices.
In other words: Comments and tweets from very active users did not move Bitcoin’s price much at all. Rather, the silent majority — infrequent users who took the time to comment on the cryptocurrency’s prospects — moved prices more, as much as ten times more, when they posted positive comments.
“They are the ones investors watch,” said Mai, whose work appeared in the Journal of Management Information Systems.
Mai, working with the University of Cincinnati, Dickinson College and Ivey Business School, collected and analyzed two years’ worth of forum posts on the world’s most popular public Bitcoin forum, Bitcointalk.
The team classi¿ed comments into positive, negative and other sentiment categories using natural-language processing techniques. They also collected two months’ worth of Twitter data, including more than 3.4 million tweets about Bitcoin.
Mai’s team then compared changes in Bitcoin’s price with the chatter around the cryptocurrency. But just as chatter can affect the price, Bitcoin’s value can affect the sentiment around it, so the team also factored in daily rises and falls in indicators such as the S&P 500 stock index, gold prices and volatility indexes to better understand the two-way relationship.
“This was the ¿rst robust statistical ¿nding to verify that social media and Bitcoin prices are actually linked,” Mai said.
“It may be intuitive, but positive sentiment moves Bitcoin prices.”
But the Stevens-led team didn’t stop there. They went a step further by dividing Bitcoin tweeters and posters into two groups: Those who were posting very frequently and those who were not in order to see what kinds of commenters affect prices most.
They found that rather than the vocal users driving changes in Bitcoin price, the price instead changed in proportion to the comments made by users who were infrequent posters. While the progress of technology and its accessibility improves our lives, it may also impede communication skills in children, and tablets and smart phone use should be very limited for children of all ages.
Highlighting the importance of introducing children to technological devices as late as possible, specialist psychologist and pedagogue Reyhan Ateş Yücel noted that this is especially crucial for children between birth and seven years old, the ages in which the brain develops the most, dailysabah.com reported.
“Technological devices may have a negative effect on the socialization and communication of children at these ages. During the pre-school period, children do not need tablets but healthy bonds with their caregivers.
Since preschool children do not have the anatomical structure to handle stimuli from the screens, they may experience anxiety while trying to fall asleep, while sleeping and restlessness throughout the day.
In their ¿rst year, children need real interactions where they can use their ¿ve senses and give responses to develop their own voice, laugh and reactions. This development lies in parents establishing a healthy bond with their child,” said Yücel.
Today’s caregivers: Smart devices
Yücel noted that during these fast and rushed times, most parents prefer smart devices instead of playing games and spending time with their children; thus, tablets and smart devices have become the new caregivers at home.
“Children do not eat without the tablet or can’t sleep without listening to songs on their devices.
“Family dinners, where once conversations were the center of attention, are now being replaced with interactive tablets.
“However, a child’s ¿rst year is crucial in establishing a healthy relationship with parents and is what forms the basis of the child’s psychological development and learning base. Long-term tablet use is closely related to attention disorders.
“Attention problems, problems in delaying pleasure and adaptation problems have been observed in children who were exposed to long-term use of technological devices during their infancy when they start school,” Yücel said.
She further noted that while tablets are fun, they also distract children from the real world and experiences.