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Bullish Mentions on Reddit In 2020 Are Closely Moving With The Price Of Bitcoin

How is the frequency of the word "bullish" on cryptocurrency groups in Reddit correlating with the price of Bitcoin in 2020?

In our first blog post article in this series we examined the correlation between the frequency of Bitcoin mentions against the USD price of Bitcoin over time. As a short mini-update, we've decided to see how the correlation is holding up in 2020 by tracking mentions of the phrase "bullish" against the price of Bitcoin. The idea behind this quick study is that generally one may expect people with positive opinions on the price of Bitcoin to use the word "bullish" more often, particularly as the phrase is often used in a speculative, trading context.

Plotting the mentions against the price of Bitcoin over 2020 so far we see:

Bullish Mentions on Reddit In 2020 Is Correlating Highly With The Price Of Bitcoin

As can be seen in the graph, the first 5 weeks of 2020 have an extremely high correlation with the price of Bitcoin, mirroring an almost identical pattern on the graph. Interestingly at the end, there is a surge in optimism outpacing the trend, followed by a fall in price. This could indicate that excess optimism is a sign of the asset being "overbought" and is a potential warning a correction is due.

The methodology used for this study

Unlike our previous 2 studies where we heavily relied upon Google BigQuery, for this short blog post we are relying entirely upon the mentions data pulled from the Reddit API. We counted each comment made in 2020 that contains the word "bullish", ensuring that individual comments that contain multiple occurences of the word are only counted once. To hone in on Bitcoin, we filtered the search to only count posts from relevant subreddits... This is because searching across all subreddits would lose the pattern due to people using the term in the context of other assets e.g. gold or Tesla. The subreddits we used in this study were:

We used multiple subreddits rather than just one as it's desirable to pull in data from as many sources as possible. This ensures we have a statistically large sample to work with, otherwise the "noise" present in random sampling disrupts the accuracy of the results. Trading subreddits were used as they are more likely to utilize trading terminology like "bullish".

Update: This article has been picked up by CoinDesk, check it out here!


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