How much is a bitcoin worth? This question is difficult to answer because bitcoin, and cryptocurrencies in general, are notoriously volatile. Users face significant market risk because of the fluctuation in the exchange rate between bitcoin and other currencies. For all the hypes about how cryptocurrency is shaping the future of fintech, it is crucial to understand the factors behind its price swing. Policy makers need to unpack the forces behind bitcoin to devise regulations and curb financial stability risks. Businesses need to understand the price movement patterns before adopting bitcoin or even launching their own digital currency — what is known as an initial coin offering. Our research studies whether and to what extent social media can explain bitcoin’s value.
Although bitcoin was intended to be used as a currency, most bitcoin owners treat it as a financial investment. Indeed, researchers find that the price movement of bitcoin resembles that of stocks rather than currency. Literature has shown that sentiment extracted from social media platforms, such as investor.