Social media and cryptocurrencies are among the most transformative technologies in the history of humankind. Both have significant influences on several aspects of our day-to-day lives, shaping how people access information, interact, invest and manage their wealth. Social media enables users to connect, access news and collect data. Bitcoin facilitates seamless and cheaper global transactions, including remittances, trading and investments.
What many individuals might not know is that social media can also significantly impact Bitcoin’s monetary value. The following article examines how social media affects Bitcoin’s value.
Social Media Trends
As of 2021, social media has over 4 billion active users worldwide. These users post and discuss different subjects on their platforms. The most talked-about topics on social media attain the status of trends, attracting the highest numbers of mentions, likes and comments online. A social media trend could last several hours, days or weeks. Directions can be positive or negative, based on the specific issue under discussion.
Therefore, if social media trends portray Bitcoin positively, there is always a high likelihood its prices will surge. For example, Bitcoin’s price hit an all-time high of $44,000 in February 2021 after Tesla founder Elon Musk’s Twitter announcement that the company had acquired $1.5 billion worth of Bitcoin.
Tesla stated they would be accepting Bitcoin in exchange for their products, becoming the first auto manufacturer to do so. The announcement sent social media into a frenzy, making Bitcoin trend for several weeks. Bitcoin’s value continued to surge in the following months, eventually hitting $58,000.
Social media trends can also be harmful to Bitcoin’s price because of their powerful impact on people’s emotions. Bitcoin’s value can also swiftly decline if a particular coverage portrays it negatively. For example, we had seen Bitcoin price dip to record lows when news of major crypto exchange hacks surfaced on social media.
Social media is critical to community building, offering a common platform that brings together people from different backgrounds. As virtual currencies such as Bitcoin become more popular, people have created various forums on social media to share ideas and learn more about them. Today, several crypto businesses like Bitcoin Prime have dedicated social media platforms to market their services, attract new users and educate the public about cryptocurrencies.
Unlike other news platforms where the audience can only read or watch the published content, social media enables users to share their views and opinions through comments. Studies have established social media comments can also impact Bitcoin’s price movements immensely.
Analysts and researchers have proven increasingly positive social media commentary can significantly drive Bitcoin prices upwards. However, it is surprising that the silent majority on social media are the greatest influencers of those prices. A recent study found that the infrequent users taking time to comment on Bitcoin’s prospects moved its prices by almost 10 times when they posted positive commentary.
On the other hand, negative commentary can drag Bitcoin’s value downwards in a short time. Increasing negative comments about Bitcoin can quickly impact discord among investors, discouraging the public from trading or investing in it. That would harm Bitcoin, causing the prices to decline by a considerable margin.
Savvy investors are often very keen on watching social media comments to gain an in-depth understanding of Bitcoin’s public perceptions and crypto market trends.
With over 4 billion active users worldwide, we can never underestimate the power of social media. As discussed above, social media is a double-edged sword that can help or harm Bitcoin’s value. Nevertheless, experts are confident social media will remain critical to promoting Bitcoin education and adoption as the world shifts towards a digital economy.