For investors striving to forecast market movements, the more data they procure, the better. Trend and fundamental analysis are the best places to begin with. However, there are other clues scattered across the web which side along with mainstream search parameters. One of these, social analysis, involves discerning the general sentiment towards cryptocurrencies on public networks such as Twitter. One bot does just that on an hourly basis, revealing which coins are feeling the love and which are receiving hate.
Although Twitter is full of bots, some of them are malicious, spamming users and spreading fake news, whilst others are awfully attractive. Watson’s Reports, is a bot that provides hourly updates on what people are saying about cryptocurrencies on Twitter. The trend analysis bot, developed by data analyst Vrypto Watson, highlights the most talked about cryptocurrencies. It furthermore examines the prevalent sentiment to reveal which coins have the most positive and negative mentions.
The most recent, hourly, at the time of publication, displays bitcoin probably out in front with over 3,000 mentions. Waves (1,491), ethereum (1,407), and ripple (1,030) follow. Below that come the likes of litecoin, neo, verge, tron, stellar, and bitcoin cash. Although bitcoin consistently leads, other cryptos enter and exit the top 10 contingent on whether they’re in the news. Nevertheless, just because someone’s talking about a cryptocurrency doesn’t qualify they’re holding it or planning to invest. Actually, several of the most popular coins are correspondingly the most hated.
A research paper published in December called “Market Sentiment Helps Explain the Price of Bitcoin” scrutinizes this trend in more detail. Its author concludes:
Through merging the concept of Metcalfe’s law, the disparity of the BTC price can be precisely explained by using a market sentiment volume about BTC that is positively scored on social networks. The hypothesis is that the price of BTC is principally a result of the demand-supply balance of buyers and sellers, which is significantly subjective on market sentiment. It is probable that market sentiment is also extremely affected by the price itself, making a circular and duplex reflexivity.
Consistent with the Watson’s Reports bot, bitcoin bears the highest amount of negative hourly sentiment (11.5%). This to be anticipated given bitcoin’s dominance. A look at the runners-up in the positive and negative classes disclose some interesting players. The most positively revealed coins are; sia (20.6%), zclassic (19.5%), and digibyte (18.7%). Ubiq and stellar complete the top five.
With regards to negativity, after bitcoin is ethereum (6.1%), litecoin (5.3%), bitcoin cash (4.9%) and tenx (4.6%). Since the bot updates its analysis each hour, these trends are relatively dynamic, with many cryptocurrencies, save for bitcoin, frequently trading places.
Open databases such as Twitter, are perfect for bots to scan. Coders have developed bots to evaluate an investor’s returns if they were to automatically buy and sell on the advice of Twitter traders, for instance. Other bots tweet when the buy volume for a coin abruptly surges. As AI and the use of bots increases, traders will increasingly take their signals from computers. For the time being, the best traders still depend on a good measure of clairvoyance and gut instinct, traits which no bot can distinguish.