Related papers: From HODL to MOON: Understanding Community Evolution, Emotional Dynamics, and Price Interplay in the Cryptocurrency Ecosystem

From HODL to MOON: Understanding Community Evolution, Emotional Dynamics, and Price Interplay in the Cryptocurrency Ecosystem

URL: http://arxiv.org/abs/2312.08394v1
Date: Tue, 12 Dec 2023 19:56:36 GMT
Title: From HODL to MOON: Understanding Community Evolution, Emotional Dynamics, and Price Interplay in the Cryptocurrency Ecosystem
Authors: Kostantinos Papadamou, Jay Patel, Jeremy Blackburn, Philipp Jovanovic, Emiliano De Cristofaro
Abstract summary: We analyze over 130M posts on 122 cryptocurrency-related subreddits on Reddit. We find an overall surge in cryptocurrency-related activity in 2021, followed by a sharp decline. We find that joy becomes a prominent indicator during upward market performance, while a decline in the market manifests an increase in anger.
Score: 13.409057009695513
License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
Abstract: This paper presents a large-scale analysis of the cryptocurrency community on Reddit, shedding light on the intricate relationship between the evolution of their activity, emotional dynamics, and price movements. We analyze over 130M posts on 122 cryptocurrency-related subreddits using temporal analysis, statistical modeling, and emotion detection. While /r/CryptoCurrency and /r/dogecoin are the most active subreddits, we find an overall surge in cryptocurrency-related activity in 2021, followed by a sharp decline. We also uncover a strong relationship in terms of cross-correlation between online activity and the price of various coins, with the changes in the number of posts mostly leading the price changes. Backtesting analysis shows that a straightforward strategy based on the cross-correlation where one buys/sells a coin if the daily number of posts about it is greater/less than the previous would have led to a 3x return on investment. Finally, we shed light on the emotional dynamics of the cryptocurrency communities, finding that joy becomes a prominent indicator during upward market performance, while a decline in the market manifests an increase in anger.

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