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Dynamics between Bitcoin Market Trends and Social Media Activity

Author

Listed:
  • George Vlahavas

    (School of Informatics, Aristotle University of Thessaloniki, 54124 Thessaloniki, Greece)

  • Athena Vakali

    (School of Informatics, Aristotle University of Thessaloniki, 54124 Thessaloniki, Greece)

Abstract

This study examines the relationship between Bitcoin market dynamics and user activity on the r/cryptocurrency subreddit. The purpose of this research is to understand how social media activity correlates with Bitcoin price and trading volume, and to explore the sentiment and topical focus of Reddit discussions. We collected data on Bitcoin’s closing price and trading volume from January 2021 to December 2022, alongside the most popular posts and comments from the subreddit during the same period. Our analysis revealed significant correlations between Bitcoin market metrics and Reddit activity, with user discussions often reacting to market changes. Additionally, user activity on Reddit may indirectly influence the market through broader social and economic factors. Sentiment analysis showed that positive comments were more prevalent during price surges, while negative comments increased during downturns. Topic modeling identified four main discussion themes, which varied over time, particularly during market dips. These findings suggest that social media activity on Reddit can provide valuable insights into market trends and investor sentiment. Overall, our study highlights the influential role of online communities in shaping cryptocurrency market dynamics, offering potential tools for market prediction and regulation.

Suggested Citation

  • George Vlahavas & Athena Vakali, 2024. "Dynamics between Bitcoin Market Trends and Social Media Activity," FinTech, MDPI, vol. 3(3), pages 1-30, July.
    • Handle: RePEc:gam:jfinte:v:3:y:2024:i:3:p:20-378:d:1441456
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    References listed on IDEAS

    as
    1. Kraaijeveld, Olivier & De Smedt, Johannes, 2020. "The predictive power of public Twitter sentiment for forecasting cryptocurrency prices," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 65(C).
    2. Agosto, Arianna & Cerchiello, Paola & Pagnottoni, Paolo, 2022. "Sentiment, Google queries and explosivity in the cryptocurrency market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 605(C).
    3. Breidbach, Christoph F. & Tana, Silviana, 2021. "Betting on Bitcoin: How social collectives shape cryptocurrency markets," Journal of Business Research, Elsevier, vol. 122(C), pages 311-320.
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