Social Media sentiment holds the key to Crypto profits – study

TL;DR Breakdown

  • The study found that sentiment expressed on social media platforms was a strong predictor of crypto returns, whereas sentiment derived from news media did not have the same impact.
  • Despite being considered a highly volatile asset, the researchers found that market exuberance positively influenced momentum without significantly affecting volatility.
  • The paper posits that sentiment impacts crypto returns primarily through price perception and demand shocks, rather than through the traditional risk premium channel.

Description

A recent study conducted by researchers at Pennsylvania State University delved into the relationship between social media, attitudes, emotions, and the cryptocurrency market. The findings of their analysis may challenge conventional wisdom regarding similar trends in other financial markets. The research paper highlighted the significant role that social media platforms play in cryptocurrency adoption and … Read more

A recent study conducted by researchers at Pennsylvania State University delved into the relationship between social media, attitudes, emotions, and the cryptocurrency market. The findings of their analysis may challenge conventional wisdom regarding similar trends in other financial markets.

The research paper highlighted the significant role that social media platforms play in cryptocurrency adoption and activity rates. Surprisingly, the study found that sentiment expressed on social media platforms was a strong predictor of crypto returns, whereas sentiment derived from news media did not have the same impact.

“Our findings indicate that social media sentiment significantly predicts crypto returns, while sentiment from news media does not.”

To arrive at their conclusions, the researchers employed natural language processing techniques to analyze vast amounts of financial news articles and social media comments. Through sentiment analysis, they generated scores related to 53 different topics and attention metrics for more than 300 cryptocurrencies. By comparing these sentiment scores with actual market returns over a specific period, they were able to assess their predictive value.

Relationship between social media and crypto

One particularly intriguing finding of the study was that while social media sentiment accurately predicted crypto returns, the risk premium channel did not. The risk premium channel refers to the lens through which consumers make investment decisions and is closely tied to market and asset volatility. Typically, higher volatility in traditional markets leads to increased risk aversion and decreased consumer sentiment. However, the study revealed that cryptocurrency displayed a different pattern. Despite being considered a highly volatile asset, the researchers found that market exuberance positively influenced momentum without significantly affecting volatility.

The paper posits that sentiment impacts crypto returns primarily through price perception and demand shocks, rather than through the traditional risk premium channel. The researchers suggested that the unique characteristics of the cryptocurrency market, such as the presence of numerous consumer investors with substantial cryptocurrency portfolios actively engaged on social media, could explain this phenomenon. They also emphasized the need for further investigation into the relationship between social media sentiment and crypto returns to gain deeper insights.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

文章来源于互联网:Social Media sentiment holds the key to Crypto profits – study

Disclaimers:

1. You are solely responsible for your investment decisions and this info is not liable for any losses you may incur.

2. The copyright of this article belongs to the writer, it represents the writer's opinions only, not represents the site's ones. Not financial advice.

Previous 2023年7月11日 20:06
Next 2023年7月11日 21:45

Related articles

  • Hotbit announces plans to halt its operations

    TL;DR Breakdown Hotbit crypto exchange has announced plans to permanently suspend its operations citing some concerns. Crypto analysts drum up the need for adaptation in the crypto market. Hotbit, a cryptocurrency exchange, has recently announced that it will cease all operations starting May 22. The exchange attributed its decision to a series of factors that have negatively impacted its operating conditions. Hotbit will begin the process on May 22 One significant event was an investigation involving a former team member in August 2022, which forced the exchange to halt its business for several weeks. Hotbit also pointed to various incidents within the broader crypto space as contributing to its decline. The collapse of the FTX exchange and the subsequent banking crises, which led to the de-pegging incident of USD Coin (USDC), resulted in a continuous outflow of funds from centralized exchanges, including Hotbit. These events adversely affected the exchange’s cash flow. Moreover, Hotbit expressed its belief that centralized exchanges are becoming increasingly burdensome and are unlikely to align with long-term trends. In response, the exchange stated that two options are…

    Article 2023年5月23日
  • NEAR Foundation and Alibaba Cloud forge powerful partnership to drive Web3 development in Asia

    TL;DR Breakdown The NEAR Foundation and Alibaba Cloud are working together to speed up the growth of Web3 in Asia and the Middle East. The partnership will give NEAR access to the developer community of Alibaba Cloud. Customers can also use the NEAR BOS, a platform coders can build and talk to other users while using Alibaba Cloud’s infrastructure. Description The NEAR Foundation and Alibaba Cloud have formed a strategic relationship to collaborate and speed up the development of dApps and blockchain technology, marking a significant milestone for the Web3 ecosystem in Asia. This partnership is a huge step forward in encouraging creativity, improving scalability, and facilitating widespread use of Web3 solutions in the area. … Read more The NEAR Foundation and Alibaba Cloud have formed a strategic relationship to collaborate and speed up the development of dApps and blockchain technology, marking a significant milestone for the Web3 ecosystem in Asia. This partnership is a huge step forward in encouraging creativity, improving scalability, and facilitating widespread use of Web3 solutions in the area. NEAR Foundation partners with Alibaba Cloud The…

    Article 2023年6月28日
  • Hooked Protocol price analysis: HOOK price hold at $1.31 as buyers eye a move above $1.35

    TL;DR Breakdown Hooked Protocol price analysis is bullish today HOOK/USD support is seen at $1.25 HOOK price is facing resistance at $1.36 Hooked Protocol price analysis shows a bullish trend over the last 24 hours, with an average increase of 2.02 percent. Today’s market began trading at $1.286 and exploded upward. HOOK is currently trading at around $1.31, with the current resistance level at around $1.36. If the bulls can manage to push past this potential resistance level, then further upside is expected for HOOK. However, a correction may be in order if the buyers cannot sustain their current momentum. Looking ahead, Hook’s price is expected to remain in an uptrend in the near-term future.  The market capitalization for HOOK/USD is currently $65 Million. The 24-hour trading volume has declined by over 37.56 and is now at $14 million. The digital asset has been on a bull run since the beginning of today, and it looks like the uptrend is set to continue in the near future. Hooked Protocol price analysis 1-day chart: HOOK breaks through $1.31 as it looks…

    Article 2023年6月12日
  • Russian ruble falls against the dollar, down 30% since the beginning of the year

    TL;DR Breakdown The Russian ruble has fallen below the 100 mark against the dollar, losing about 30% since the beginning of the year. The Russian central bank blames this on the country’s falling trade balance. Description On Monday, the Russian ruble experienced a decline, falling below the 100 mark against the dollar. That marks its weakest point since March 23, 2022, a few weeks after Moscow initiated full-scale conflicts in Ukraine. This year, the ruble has devalued by approximately 30 percent compared to the dollar, attributed to increased imports and decreased … Read more On Monday, the Russian ruble experienced a decline, falling below the 100 mark against the dollar. That marks its weakest point since March 23, 2022, a few weeks after Moscow initiated full-scale conflicts in Ukraine. This year, the ruble has devalued by approximately 30 percent compared to the dollar, attributed to increased imports and decreased exports for the nation. Russian ruble reaches almost a 17-month low against the euro According to Moscow Exchange data, the ruble was observed trading at 101.01 to the dollar. Simultaneously, it…

    Article 2023年8月15日
  • SEC’s interlocutory appeal on Ripple XRP was a big mistake, John Deaton agrees

    TL;DR Breakdown Greg Beuke, an attorney and crypto enthusiast, took it to X, saying that the interlocutory appeal was a big mistake for the SEC. Ripple maintains that despite the SEC’s ability to appeal, the primary legal case should advance concurrently with the appeal process, Ripple CTO says. Description Greg Beuke, an attorney and crypto enthusiast, took it to X, saying that the Ripple interlocutory appeal was a big mistake for the SEC. Beuke went on to say that Judge Torres’s ruling did not mean that sales over exchanges could not be investment contracts; hence the SEC misunderstood the filing. Meanwhile, a pro-XRP attorney, … Read more Greg Beuke, an attorney and crypto enthusiast, took it to X, saying that the Ripple interlocutory appeal was a big mistake for the SEC. Beuke went on to say that Judge Torres’s ruling did not mean that sales over exchanges could not be investment contracts; hence the SEC misunderstood the filing. Meanwhile, a pro-XRP attorney, John E Deaton, mentioned that Beuke had done an excellent job in his outline. SEC’s mistake in the…

    Article 2023年8月21日
TOP