On December 16, 2020, Bitcoin reached an all-time high of $20,297.20. A month from that date, the cryptocurrency grew over 100%, reaching a value of $42,000 on January 8. Analysts attributed this increased appetite for Bitcoin to institutional fear of missing out (FOMO). Earlier in the year, Michael Saylor, and a handful of asset managers revealed they had invested in the cryptocurrency. These big money moves signalled confidence in Bitcoin as a store of value.
It’s not just institutions risking their capital on Bitcoin. When institutional whales announce their Bitcoin investments, it tends to have a ripple effect, especially on social media. Optimists see it as validation of their investments. Others might take it as a sign that the cryptocurrency has come of age. This partly explains why this circle has seen more favourable press and sustained high-level price. The underlying role of social media cannot be denied. In a 2018 study, Feng Mai and colleagues concluded “social media is an important predictor of future values of bitcoin. More bullish (or bearish) forum posts are significantly associated with higher (or lower) next-day bitcoin market price.” Their conclusion was based on data obtained from the cryptocurrency forum and Twitter.
One can learn a lot about how social media influences the finance world by examining interactions on these platforms. Recently, hedge funds felt the impact of social media when Redditors collaborated to influence the value of Gamestop stocks. The impact of a particular subreddit, r/WallStreetBets, was so immense Discord closed down the server of the group. Even Robinhood on 28th January halted trading on certain stocks that had generated social media buzz. The Bitcoin community on Twitter is not so different and might profit from recent fallout between the financial system and retail investors who depend on social media for financial information.
Newcomers & Influencers
New Bitcoin investors tend to announce their foray into the crypto space. A Twitter search for “bought my first Bitcoin” tends to produce a decent amount of results. What is immediately noticeable is the number of replies aimed at educating these newbies. Some might try to pitch other cryptocurrencies. It is not unusual to find serious debates about the value of different cryptocurrencies in the reply sections of these tweets. These debates tend to swing in favour of Bitcoin, a reflection of its overwhelming value and popularity.
In a quick poll conducted in January 2021, 47% of respondents admitted social media had the most influence on their decision to buy Bitcoin. 41% said their decision was based on a conversation with family and friends in real life. The bitcoin community is becoming increasingly vocal on social media. Twitter also hosts channels which show the progress of the cryptocurrency. For example, the Twitter handle, @BitcoinStimulus, tweet the daily value of the $1200 stimulus given to Americans in March 2020 worth if they bought Bitcoin with it. The handle currently has over 20,000 followers.
Twitter also hosts some of the foremost Bitcoin experts. Andreas Antonopoulos has a long track record of teaching about Bitcoin, quitting his consulting job to become a Bitcoin educator back in 2012. With over 540,000 followers on Twitter alone, Andreas is a key voice in the Bitcoin space. What makes him stand out is his focus on the technical aspects. When reports of a possible double-spend surfaced on January 21 2021, Andreas used his platform to assuage fears. He held a live stream section on YouTube detailing what actually happened and why the reports were wrong. His book series on Mastering Bitcoin and Mastering Ethereum is usually recommended readings for developers interested in building blockchain solutions.
On the investment side, few hold as much sway as Anthony Pompliano, a “Bitcoin evangelist” who recently announced having over 95% of his holdings in cryptocurrency. He has appeared on different platforms from podcasts to television shows, advising people on how to store their wealth in Bitcoin. On the 27th of January, 2021, he launched a cryptocurrency job platform aimed at providing jobs in the cryptocurrency industry. Bitcoin influencers hold a lot of sway on social media. They also put in the work of educating different classes of investors (corporate and retail) about cryptocurrency.
Another notable class of influencers are celebrities involved in the cryptocurrency space. Nigerian music star Davido with over 8.8 million followers on Twitter is a brand ambassador of a cryptocurrency platform Bitsika. Whether it’s celebrities like Davido or Mr Beast tweeting about Bitcoin or founders like Elon Musk talking up Bitcoin, there is a hoard of people pushing the narrative through retweets, likes or comments.
It should come as no surprise that savvy politicians now use social media to pitch to the bitcoin community. Mayor Suarez recently talked about the city’s plan to be more welcoming to crypto investors and entrepreneurs. He goes as far as suggesting he is open to investing some of the City’s funds in the cryptocurrency. The City of Miami currently hosts the Satoshi bitcoin white paper on their site.
It’s not only bullish news that gains traction on social media. Policies which might have a negative impact on Bitcoin also get traction among the cryptocurrency community. During Janet Yellen’s Senate confirmation hearing for Treasury Secretary, videos of her position on Bitcoin circulated Twitter, fuelling fears about regulatory pushbacks. There are also Bitcoin sceptics and minimalists waiting to tweet negative news and analyses about the cryptocurrency.
When Russell Okung tweeted “paid in Bitcoin” on 29th December, he became the first athlete to do so. He received half of his $13M earnings in cryptocurrency through a third-party platform. Since then there has been news of soccer footballer financing deals in Bitcoin. Sequoia announced they were open to paying interested employees in Bitcoin. Optimists took these events as a vindication of the promise of Bitcoin, a decentralized system which no institution can control. The implication is that social media will remain a veritable source of conversation and interaction concerning financial assets, and cryptocurrencies will ride the different waves it throws.
Bitcoin as a financial asset will continue to generate controversies online. Some financial analysts are of the opinion price surges are bubbles. Nevertheless, the underlying technology – blockchain – will remain invaluable. Decentralized platforms which offer individuals freedom from central control will continue to generate buzz on social media. This, in my opinion, is the biggest victory of Bitcoin.
Osumo Michael is a data analyst with a background in the behavioural sciences (Psychology). His experience in occupational health, sports, and e-commerce has made him realize the impact of social data on business outcomes. He is part of the team-building social commerce solutions at LoonaHq currently.
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