Cryptocurrency and the Impact of Twitter

Conversations about cryptocurrency aren’t always positive, particularly when we look at what users are saying on Twitter. While some cryptocurrencies generally attract praise and good words, others are more often the subject of complaints and scepticism.

By analysing sentiment around cryptocurrencies, and correlating these thoughts with specific currencies wherever they were mentioned, we found that users were most dubious about a handful of currencies in particular.

The cryptocurrencies with the highest levels of negative mentions were Ethereum and Bitcoin. Ethereum attracted attention for all the wrong reasons in 29% of cases, with Bitcoin a close runner up at 27%. Users appeared less wary of other cryptocurrencies such as Dogecoin. This currency proved most popular, with only 16% of users taking to the social network to voice any concerns.

The most hated cryptocurrency, according to Twitter were as follows:

1. Ethereum (29% negative)
2. Bitcoin (27% negative)
3. Cardano (16% negative)
4. Litecoin (8% negative)
5. Dogecoin most popular (6% negative)

The most popular cryptocurrency on Twitter, according to our analysis, is Dogecoin. When examining tweets about this currency, we found that users were positive in 94% of cases.

Litecoin also attracted high levels of praise on Twitter during our period of research, with 91% of users tweeting about Litecoin in a positive way. Cardano was tweeted about positively in 84% of cases, while 73% of tweets about Bitcoin were positive.

Ethereum, which was the cryptocurrency most mentioned in negative tweets, also attracted the lowest levels of praise from users during the research period. Good things were said about Ethereum in 71% of the tweets shared in this time, cementing the currency’s position at the bottom of the leaderboard.

The most loved cryptocurrency, according to Twitter were as follows:

1. Dogecoin most popular (94% positive)
2. Litecoin (91% positive)
3. Cardano (84% positive)
4. Bitcoin (73% positive)
5. Ethereum (71% positive)

One of the key questions of our research was whether or not it was tweets driving price fluctuations, or whether cryptocurrencies were simply trending as a result of the attention generated by dramatic changes in price.

Our analysis found that trending topics did indeed hold sway over the pricing of cryptocurrencies. Our researchers found instances of tweets leading rallies on Dogecoin, however this wasn’t the only currency that saw prices driven up or down as a direct result of conversations on social media.

Smaller cap cryptocurrency price fluctuations (such as Dogecoin) are being spurred or led by retail investors’ twitter activity and sentiment, while larger cap cryptocurrency price fluctuations lag or influence tweet activity and sentiment.

We believe this inverse relationship shows correlation with social media in general impacting smaller cap and evolving market pricing, and gives rise to an interesting trend in a broad class of emerging assets such as NFT’s, cryptocurrency, and small cap ‘meme stocks’.

Scroll down to see the specific changes reflected on Twitter and in stock prices⬇️

Bitcoin (BTC) is the most tweeted about cryptocurrency according to our research, with 49% more overall tweets than Dogecoin (the second-most-talked about). As the first decentralized cryptocurrency, BTC has always prompted a lot of discussion and is often considered ‘the friendliest crypto to get into’, with 55% of its investors saying they bought it in the last year.

Although a well-known and ‘friendly’ crypto, this e draws a lot of negative attention from long-term cryptocurrency investors.

Based on our analysis, Twitter activity increases when the price is at its lowest, and when the price is high the negative tweets remain low.

The opposite of ‘no news is good news’ is the main trend when it comes to BTC and people reacting on social media seems to signal a bad time to come.

The time period that we analysed was a volatile era for BTC. In March 2021, Elon Musk announced that Tesla would accept Bitcoin as payment. The pioneering decision drew huge amounts of attention to the cryptocurrency, with prices shooting up quickly in the hours following Musk’s announcement – which (by no coincidence) also happened to be shared on Twitter.

Two months after Musk told the world that his company would accept payment in BTC, he withdrew his words and made a full U-turn on the decision. Musk cited environmental concerns as the reason for his change of heart. Not long after, the price of BTC plummeted, and users took to Twitter in their droves to discuss the cryptocurrency.

Looking at our analysis, it’s clear to see that Dogecoin (DOGE) is the ‘meme stock of the cryptocurrency universe’, and that with both the drops and increases in price twitter activity peaks.

However the spike in tweets and price were largely caused by Elon Musk’s decision to accept payment in cryptocurrency in 2021, similarly to Bitcoin. DOGE was roped into the situation, with feelings around this cryptocurrency being heavily influenced by its own work with Tesla and Elon Musk.

Our analysis shows the futility of DOGE, both in price and on Twitter, which can make it difficult for investors to ‘hodl’. But DOGE does have committed diamond hand investors, which includes Glauber Contessoto. He made over $2million investing in DOGE, only to lose his millionaire status in just one day – despite this he did not sell his holdings. He told CNBC Make It: “Whatever happens in the short-term doesn’t matter to me because I’m looking to ‘hodl’ dogecoin for years to come. I’m truly not worried at the end of the day.”

DOGE – which was originally created as a joke to poke fun at the seriousness of cryptocurrency – prices rose by 10,000% from Oct 2020 – Dec 2021, as a direct result of Musk’s mentions of the currency. In December 2021, it was also announced that Tesla would accept payment in Dogecoin for some of its merchandise.

In May 2021, Musk tweeted that he was working with Dogecoin developers to “improve system transaction efficiency.” As soon as Musk hit the tweet button, the price of the cryptocurrency started to surge.

During this period of time, we saw an increase in both negative and positive tweets about Dogecoin, but the upsurge in positive tweets was far greater than any rise in negative ones.

Ethereum (ETH) prices soared in 2021, but fluctuations in price throughout the year remained incredibly volatile. It began the year on a high, with prices doubling by mid-April. However, May saw the currency drop to half of its value.

Based on our Twitter analysis, ETH was the only cryptocurrency in which the price increased inline with the negative tweets.

In March 2021 negative tweets increased from 23% to 31%, the following months saw the price of ETH increase by 81%. Whilst the price then dropped again slightly, a similar pattern of negative tweets emerged in August 2021 – just before the price reached its highest point in the whole analysed time period.

By and large ETH’s negative tweets seem to escalate inline with price increases, which gives the impression that people do not want it to be successful, including prominent cryptocurrency investor and tweeter Su Zhu. In November 2021 he stated that he had “abandoned” ETH despite supporting it in the past. As a result, we saw another upsurge in negative commentary about the currency on Twitter.

In August 2021, ETH split into two chains. This protective move was a response to a bug which exposed the currency’s network to attack. Negative tweets spiked around this time as anxiety over security grew. September saw another price fall, this time of 20%, but more recent weeks have seen some recovery, with the currency climbing back up by 16%.

There are complaints of ETH being slow compared to its rivals. It can process between 15 and 45 transactions per second, and energy costs are high in comparison to other cryptocurrencies.

With ETH facing numerous challenges, there have been opportunities for so-called “Ethereum killers” to gain ground. As an example, Solana (SOL 0.83%) now ranks as the fifth-largest cryptocurrency, having usurped its competitors over 117 times in 2021. Similarly, Avalanche (AVAX -1.28%) is now positioned at number 10, having soared through the ranks 39 times.

Experts are predicting that 2022 will be a make or break year for Ethereum. NextAdvisor explains, “the blockchain-based software network has many uses and applications across the tech world, especially for gaming, music, entertainment, and decentralised finance (DeFi) — making it one of the most popular and widely-used cryptos this past year.”

Litecoin (LTC) followed the introduction of Bitcoin in 2009, becoming one of the first altcoins to step foot in the world of cryptocurrencies. It attracted the least amount of attention on Twitter during our research period, despite being ranked amongst the top 20 cryptocurrencies across the global markets as of July 2021, according to market cap.

February Feb 2021 saw LTC climb to its highest price level since March 2018, and there was more good news in September 2021, when a fake press release was released announcing that Walmart was going to be accepting LTC. Despite being proven to be a hoax, this statement resulted in the currency’s price jumping by 20%. The news also led to a spike in positive tweets, closely followed by a surge of negative ones as news spread that the announcement was a hoax.

The price of digital currency Cardano had dipped quite dramatically by the summer of 2021, but all was not lost. In fact, all it took was an announcement by a leading digital asset investor to get prices moving in the right direction once again.

Grayscale, the world’s largest crypto asset manager, gave its seal of approval by adding the currency to its Digital Large Cap Fund in July 2021. This decision led to a considerable rise in the price of ADA.

Before the end of August, ADA had hit a new all-time high of $2.65. By September, ADA was going from strength to strength once again. The currency soon entered the smart contracts arena, by officially adding smart contracts capabilities during the implementation of the “Alonzo” hard fork.