A research paper published by the Southern Methodist University revealed that the volume of tweets and Google Search Volume Index were the leading price indicators for Ethereum and Bitcoin.
According to the research, data on Twitter making mention of Ethereum and Bitcoin were gathered, the same was done using Google trends. Based on previous research, the hypothesis was that the number of tweets and their sentiment can have an effect on prices. The study revealed that the number of Google searches and tweets change first before prices do.
Table of Contents
Bitcoin (BTC) News Today
Sentiment’s role in the market or technical analysis is to reveal the attitude of people towards the whole market or individual index as regards Ethereum and Bitcoin. Sentiment Analysis theory is an aspect of technical analysis that states that price trends are basically a reflection of crowd psychology. Therefore, theoretically, if people’s shared views towards certain crypto or stock could be measured positively or negatively, the price trajectory could be estimated.
According to this study, tweet volume was found out to be a leading factor in crypto prices. For example, the researchers identified that there are 21 million bots on Twitter posting facts about prices, spam, advertisements etc.
Ethereum (ETH) News Today
Another issue found out with Twitter was that sentiment is most times positive in nature, even when Ethereum and Bitcoin’s prices were decreasing.
Methodology
Researchers utilized open source VADER (Valence Aware Dictionary and Sentiment Reasoner) for the analysis of tweet data. Data for the tweet was taken dating from 2014 while Google trends data was taken back to 2004 according to the proportion of all searches related to Bitcoin and Ethereum.
Results
As regards Google trends data, the report found out that the price had a high correlation with searches for the keyword Ethereum and Bitcoin, and these searches happened before the actual rise in prices were observed.
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