Twitter & bitcoin: are the most influential accounts really influential?

ABSTRACT

There is a vast amount of information flow in social media about bitcoin, which may affect investors’ decisions. This article investigates whether tweets may affect returns or trade volume changes of bitcoin and, more importantly, whether some Twitter accounts are more influential than other Twitter accounts. We conduct two separate analyses based first on all Twitter accounts and then on the most influential 50 Twitter accounts, which have been selected as such by Unitedtraders. We use the number of positive, negative and neutral tweets by Valence Aware Dictionary and Sentiment Reasoner (VADER) in a logistic model to analyse if tweets have any valuable information about the change in both return and trade volume of bitcoin. Our results indicate that tweets can be used to predict bitcoin returns. Notably, the most influential accounts are the drivers of returns, but all Twitter accounts simply introduce some noise in volatility. This result indicates that following only these 50 most influential accounts may provide the information needed for investors.

KEYWORDS:

• Bitcoin
• sentiment analysis
• VADER
• Twitter
• logit model

Acknowledgments

We are immensely grateful to Prof. Thanasis Stengos for his comments on an earlier version of the manuscript, although any errors are our own and should not tarnish the reputations of this esteemed person.

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 We limit the number of tweets to 100 thousand to shorten the data collection process. We believe that this will not affect the estimation results since there were only a couple of days with more tweets than 100 thousand tweets.