An analysis of cryptocurrency subreddits and market capitalization

In the following analyses, I focused on 20 cryptocurrencies that were picked from the Top 30 in terms of market capitalization (based on data from coinmarketcap.com).  Some of these coins had to be excluded as no subreddit existed (e.g. Bitcoin Gold) or simply because my algorithm couldn't detect the proper subreddit, although (at least) one exists (e.g. Dash, whose subreddit is  r/dashpay). In the future, I will refine the code such that it also picks up on those subreddits. One last note: for some cryptocurrencies, several subreddits exist (e.g. r/Ethereum and r/EthTrader). I have decided to focus only on the main subreddit (r/Ethereum in the example), as I assume that the users will be largely overlapping anyway (a subscriber to r/EthTrader is likely also a subscriber of r/Ethereum).

Number of reddit subscribers follow market capitalization

In this post, I would like to explore the dependencies of reddit subscribers and market capitalization of various crypto currencies. For this, I gathered data about various cryptocurrencies using the APIs provided by coinmarketcap.com and reddit.com. The analyses presented in this first post are rather simple and straightforward,  but I hope to extend these analyses in the future. In the first step, I have looked into the raw numbers of reddit subscribers for various cryptocurrencies.

Not surprisingly, Bitcoin not only dominates the crypto sphere in terms of market capitalization, but also with respect to the number of reddit subscribers. At the time of data retrieval (dec 7, 2017), the Bitcoin subreddit was subscribed by 484.240 users. Bitcoin was followed by the Ethereum subreddit, with a total number of 175.607 subscribers. Litecoin, with 88.114 subscribers, completes the Top 3. Overall, the ranking of the coins by reddit subscribers looks rather similar to the ranking by market capitalization, there are also some differences (e.g. Bitcoin Cash). 

In general, there is a strong relation between the number of reddit subscribers and the market capitalization of a cruptocurrency. This strong relation is expressed as a highly significant correlation between the two variables (see plot below). 

There are two obvious reasons for this relation: (1) High market capitalization generates interest and, in turn, attracts users to subscribe to a particular subreddit. (2) A strong community (i.e., high number of subscribers) improves the product and/or generates hype around a cryptocurrency, leading to an increase in price. 

Change in subreddit subscribers over the last 7 days

A more interesting aspect to look at in more detail are the changes in subscriber numbers over time. As I have only started to collect the data around one week ago, this is the longest time span that I can consider for this analysis. As computing the absolute change in subscribers would be unfair, I have computed the relative change in subscriber numbers (in %). 

This plot shows a few interesting things. First, unlike before, it is not the established cryptocurrencies that  dominate here (despite the media attention for example Bitcoin receives). The clear number one is EOS, an Ethereum competitor whose token has substantially gained in value over recent weeks. Accordingly, over the last 7 days, the EOS reddit grew by a phenomenonal 50%. Second and third in the list are IOTA and Cardano, respectively. Again, these coins showed substantial price gains over recent weeks. Moreover, especially for IOTA, the announcement of the data marketplace and various big collaborations surely sparked further interest, leading to a growth of the subreddit. Ranked on places 4 and 5, we find Nxt and Ardor, the tokens of the two blockchains developed by Jelurida. I assume that the increase in interest in these coins is related to the upcoming Ignis airdrop for Nxt and the launch of the Ardor mainnet on 1st of January 2018. It is interesting to note that Ardor ranks relatively low in terms of market capitalization (#28 on coinmarketcap.com), yet has the 5th fastest growing reddit community. It will be interesting to see whether this increase in interest also manifests in increases in the price.

This was the first part of my reddit / cryptocurrency analysis. In the next part, among other things, I would like to explore in more detail how fluctuations in reddit subscribers and price fluctuations relate and how different reddit communities overlap. I hope you found this piece interesting. Please let me know if you have any questions about these data or suggestions for other interesting projects.