This is the last in our series examining mentions in Reddit comments as a predictor of Bitcoin price behaviour (see Lamborghini mentions correlating with the price of Bitcoin for one of our favourites in this series). For this last blog post, we'll be taking a look at the already infamous Corona Virus, which is threatening to turn the entire global economy to a standstill.
In this article we will be seeing how closely chatter about the Coronaviruswas linked to movements in the price of Bitcoin, using our usual method of counting mentions in Reddit comments.
So how do we perform this wizardry?
The methodoloy used is basically the same as documented here. In a nutshell, we count the comment mentions of the Coronavirususing the PushShift.io Reddit API and plot this against the price of Bitcoin, on a daily or weekly basis as appropriate.
In particular, we count the comments which feature either of these key phrases:
Getting straight into it, here is the graph:
The horizontal x-axis is of the form year-week number. To make things a tiny bit clearer, we then invert the y-axis of Coronavirus mentions:
Interestingly, we can observe there is initially no obvious correlation between chatter about Coronavirus and the price of Bitcoin - presumably because the potential economic impact of the disease weren't being considered as the possibility of it becoming epidemic seemed remote.
However, more recently as the price of Bitcoin plunged, we can see a large spike of Coronavirus comments occuring at the same time. We'll now turn to looking at the data at a more granular, daily level.
As can be seen above, there is a strong correlation even when broken down to daily comments and it seems that it could be a potential signal in terms of price changes.
It's probably safe to say the jury is still out on whether the "Corona indicator" could have been used to make pofitable shorts on Bitcoin, but it's always fun to back test with data. We'll soon be launching our user friendly backtesting service for a range of cryptocurrencies as well as in-depth volume analysis trading tools - feel free to sign up for our free beta if that interests you!
Your support in retweetng our article is always appreciated:
Indexing Reddit comments into our db and noticed counting the amount of chatter about Coronavirus in Reddit comments is like a technical indicator correlating with BTC price.— ChartStarHQ (@ChartStarHQ) March 4, 2020
Read our blog post to see this discussed in more depth 👇https://t.co/L4Fz5ANyQ0 pic.twitter.com/uZ0VkdVlbh
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