Does Twitter affects price of cryptocurrencies?
2 min readIllia, the mysterious author of the Analytics Telegram channel, introduced statistics of the most discussed new coins on twitter from March 2020. The chart features several well-known coins, including WRX, HNS, COTI, BTT, MATIC, and more.
What can be found on the list
Per the stats, WazirX (WRX) is receiving 9,9% of the mentions. Then, it goes Handshake (HNS) which received a price boost in the last few hours, as well as WazirX. Those two tokens had the listing in February 2020 but already gained traction among traders. Then, COTI and Matic are going on the list, sharing 5.5% and 5.3% respectively. The fifth one is BitTorrent (BTT), which designates 4.8% of the mentions share. Worth noting that OGN has jumped from #20 to #6 recently.
BTC price theorists say that references to Twitter match the price
EToro researchers say that the more people mention coins on Twitter, the more their price rises. EToro announced a partnership with the data analysis firm, TIE, to offer a new metric for longs.
It keeps track of how many references to a given coin and then estimates other price movements. Twitter users sentiment analysis is something worthwhile, says Joshua Frank, CEO of TIE. He says it’s not a hunt that keeps coin prices high. They are people’s opinions and appreciation.
Twitter is kind of the epicenter of the crypto universe. There’s nothing fundamentally driving the value of crypto. There are no earnings, there are no dividends, there’s no revenue. Crypto remains an asset class driven by the wisdom of the crowd.
Indeed, many of the crypto influencers seem like they are relishing on Twitter. Because they issue a ton of content and posts, and you only keep noticing the bells ringing.
Practice is old, but it has shortcomings
Twitter trends play a major role in quick orientation. Even before something is on the news, it’s already on Twitter. However, there are many robots and price manipulators in the space. According to TIE scientists:
We’re eliminating about 90% of tweets because we think they’re coming from bots or people trying to manipulate the market.
It’s frightening that up to 90% of Twitter crypto accounts could be just for manipulation. However, we have already seen many cases where sentiment actually coincided with price dynamics. For example, already in 2013 analyst “Levelsio” predicted the movement of the price of BTC using Twitter.
Twitter is a powerful tool. It is a fast social network where you can find a lot of fun, lessons, politics, but also investment advice.
