As Bitcoin evolved from a niche phenomenon to a global financial phenomenon, the media quickly began to understand what cryptocurrency is and how they should cover it.
At first, the results of this work were dubious, because Bitcoin was often undeservedly called a bubble and a tool of scammers, but now even large media understand the structure of blockchain assets and therefore have an impact on the price of the main cryptocurrency. Let’s figure it out – how does the media react to what is happening in the world of cryptocurrencies?
To begin with, a little clarification: criticism of Bitcoin sounds, including now, and this is happening even despite the incredible profitability of the asset over the past few months. In thirty days, the BTC rate increased by 46.7 percent, although this figure was calculated after the current drawdown in the value of the asset.
The most recent statement is the words of Janet Yellen, the former chairman of the Federal Reserve System and a candidate for the post of the head of the US Treasury. The day before, she talked about the connection of cryptocurrencies with the underworld and once again remembered the use of coins in money laundering and financing prohibited activities, Decrypt reports.
The news became popular because of Yellen’s post. Against the background of all this, LongHash experts decided to investigate the connection between what is happening in the world of cryptocurrencies and articles in the media.
What will happen to the price of Bitcoin?
To understand this issue, experts of the news resource LongHash conducted their own investigation, analyzing more than 2.6 million articles published in well-known media in the period from January 2016 to April 2017. Analysts have studied exactly the previous bullish cycle – that is, the growth stage, since the current one has not yet ended and has hardly begun.
Research has shown that news coverage of Bitcoin is fairly closely correlated with, that is, related to price. The number of news stories about BTC has skyrocketed along with the value of the coin in 2017. Over the aforementioned time period, the amount of daily news about Bitcoin showed a moderate correlation coefficient of Pearson with the price of BTC at 0.39.
Recall that correlation determines the relationship in the movement of different assets or events. If it is positive, that is, it is in the range from 0 to 1, then there is a connection between the studied phenomena. If negative, then assets change in value opposite to each other. Finally, zero correlation means no relationship.
In other words: it looks like media representatives were following the public demand for news about Bitcoin, rather than creating it. That is, at first there was a price jump in the cryptocurrency, and only then the number of news publications about it grew sharply. And this is quite logical, since novice traders usually react to a sudden change in the market situation with a delay, which is why their trading decisions are often erroneous.
It is also important to note that non-core cryptocurrency resources, which are well known all over the world, most often publish materials about Bitcoin and other coins even when the popularity of the topic has grown significantly. Thus, they seem to be late for the beginning of the formation of a new trend, but one way or another they disperse it. Still, among the readers of such media there are people who are ready to react to the trend and invest in coins – although they are not familiar with the principle of their work.
Now let’s move on to the main question – how well do the media “maintain” a positive mood after the price jumps in cryptocurrency rates?
To answer the assigned task, LongHash experts used tools called VADER and TextBlob. The principle of their work is very similar: each tool returns a coefficient value in the range from -1 to 1, depending on the positive or negative words in the text. For example, the constant repetition of the words “terrible”, “bad” and so on will give the coefficient value as close to -1 as possible.
LongHash experts have found no evidence of serious media bias against Bitcoin. The data shows that media coverage pretty closely follows the public demand for information about BTC, and two different sentiment analysis tools have failed to reveal any evidence of bias or serious bullish sentiment.
Accordingly, journalists talked about the situation in the industry without any prejudice. If the market showed significant growth, the news background was positive. However, after the crashes, there followed a new wave of allegations that the cryptocurrency project was in a bubble and other well-known accusations.
Of course, these conclusions are not entirely accurate. The data covers only 26 news sources over several years, with much more media writing about cryptocurrencies. Also, you cannot completely rely on the TextBlob and VADER tools. In this regard, it is necessary to remind once again that when analyzing the market, traders and investors should rely only on known facts, and not on the installations broadcast on TV or on popular resources.
We believe the research results can be considered positive for the cryptocurrency niche. Apparently, most news platforms do not have prejudices against Bitcoin and other coins, which means that they simply react quickly to changes in what is happening in the niche. If cryptocurrencies collapse, criticism prevails among the opinions of experts, while in another situation there are usually no problems with this.
This means that journalists of even non-core resources are ready to cover events in the cryptocurrency niche and attract new blockchain fans. Since the acquisition of BTC is now at its peak of popularity, this situation will clearly benefit the market.