Home Cryptocurrency How Social Media Affects Bitcoin Prices?

How Social Media Affects Bitcoin Prices?

by Ava-Rose Calderon

The introduction of Bitcoin has the potential to usher in a technological revolution in financial markets. What factors go into determining its value is a crucial open subject with far-reaching corporate and policy ramifications.

The distinctions between traditional finance and social media influence might blur when tech CEOs are everywhere on social media. Large influencers’ views regarding bitcoin appear to irritate retail investors in particular. Elon Musk’s Twitter bio was changed to bitcoin, which signaled to retail investors that Musk might be preparing to invest in bitcoin, which he later did through Tesla. This is in addition to the CEO’s considerable control over other assets, particularly dogecoin.

In this article, we will tell you exactly how social media has an effect on the changing bitcoin value. Also, if you are thinking about trading cryptocurrency, you can visit this site.

Why is Bitcoin so Volatile?

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Being a bitcoin (BTC) investor may be a roller coaster experience. Since its creation in 2009, the world’s most recognized cryptocurrency has confused commentators by climbing to mind-bogglingly high values, yet bitcoin prices have remained characterized by significant volatility.

The first and possibly most important thing to keep in mind with bitcoin is that it has no inherent worth. This means that typical valuation methodologies like discounted cash flows can’t be used to quantify it. And, while bitcoin is sometimes compared to gold as a “store of value,” it does not exist in the physical world.

While bitcoin has an increasing number of applications, its price has yet to be assigned a defined value. As a result, the movement of the currency is more subject to sentiment and story.

The strength of feeling has already created a lot of volatility in traditional stock markets in 2022. A group of retail investors coordinating themselves via social media to collectively buy a specific stock to enhance its price prompted the GameStop (GME) short squeeze in January.

While bitcoin prices can skyrocket on the spur of the moment, they can also plummet for virtually no cause. Because bitcoin is not tethered to a real value like gold, fluctuations in emotion can have a greater impact on it than traditional stock market rivals.

Crypto And Social Media Have A Long History Together

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Since the inception of Bitcoin, there have been crypto and internet discussion boards. Bitcoin creator Satoshi Nakamoto launched the popular forum BitcoinTalk shortly after it was introduced to the world, where most crypto-related debates took place.

We noticed a correlation between an increase in internet mentions of Bitcoin and its development and price shortly after Satoshi chose to vanish forever in 2010. The more people who talked about it, the more valuable it appeared to be. Reddit and Twitter, which are also among the most bitcoin-friendly social media platforms, shone out in terms of community building and important information.

Later, when privacy-focused talks and closed groups became more popular, Discord and Telegram caught up to the trend. Following their usage in ICO frauds, these sites saw a lot of instability from consumers, who saw them as less trustworthy as information sources.

Keeping an eye on social media has become the norm for crypto traders as a method to not only watch overall market sentiment but also to anticipate scenarios based on Musk-style interventions and try to predict price ebb and flow. It may be wise to sell when the public begins to feel extremely positive about Bitcoin (to the point that Twitter accounts add laser eyes to their profile images). It might be time to buy bitcoin when the same audience starts trashing it and declaring it dead.

Of course, evaluating social media sentiment is a difficult task. You could browse Twitter or Reddit, but you just won’t have enough time. You can also gather data in mass and attempt to analyze it in bulk, but you risk missing out on trends. You can likewise check out every one of the things specialty-related influencers are discussing and attempt to decide how the public will act dependent on this data, or even utilize specific instruments to help your journey.

What is Social Listening And how it affects Bitcoin Value?

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Social listening is defined as a method of estimating a brand’s or company’s popularity by pulling information from all social media channels, such as blogs, news sites, microblogs like Twitter, social networking sites, forums, and message boards.

Film fandoms are only one illustration of how social listening has grown in importance. As newer, more disruptive technologies such as Bitcoin gain traction, people who shape public perception of Bitcoin get traction as well.

When you connect social listening to the world’s largest financial revolution, Bitcoin, it becomes exponentially more powerful. It’s now possible to connect the dots between emotion and market movements by monitoring and analyzing data from social media sources, particularly when it comes to stock-related communication.

Even the world’s largest stock exchange has taken notice of the impact that social media data has on market pricing. Our understanding of how influencers can utilize emotional data to alter public perception of commodities like bitcoin is considerably more advanced than most people think, according to the findings.

After gathering examples of celebrity/influencer tweets affecting market volatility, the surface level similarities become readily evident. The hyper-specific nature of these data-driven insights, as well as how they are employed, is, however, of more significance.

Wealthy and powerful public people around the world have become acutely aware of their power to influence public opinion. With just 280 characters, several celebrities have discovered how to instigate revolution or pump their favorite coins and equities. Influencers ranging from celebrities to politicians have used their social clout to sway Bitcoin sentiment in their favor throughout the Bitcoin revolution.

Conclusion

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Musk and other well-known influencers have understood that their social media profiles are becoming a more potent business weapon. People rush to an asset when celebrities write about exciting “investment prospects” since they already have strong positive connections with that star. Furthermore, the same celebrity’s internet fandoms begin to disseminate and magnify the investment idea, creating an epidemic-like spread.