Abstract
Abstract For the past years, cryptocurrencies have been a hot and controversial topic that has captured the attention of the whole tech world. Even if right now the portfolio of digital assets is considerable in size, the first cryptocurrency, Bitcoin, exploited its pioneer advantage and managed to remain at the center of attention both for the media and investors. During 2020, one of the most chaotic years, Bitcoin boomed in November 2020 almost doubling since the end of 2019. This boom is the result of a combination of factors, such as the fear of missing out translated into a chain reaction of public and private companies to consider Bitcoin a safe reserve asset, a hedging method against inflation, which represents a substitute for traditional hedging instruments, the infrastructure developed around it over the years, and lastly the hype created by influential figures through news and social media platforms. There have been many public figures that exhibited interest in cryptocurrencies through platforms such as Twitter, for instance Elon Musk, Bill Gates, Kanye West, Hugh Laurie, Mike Tyson and Gwyneth Paltrow are just some in a long list of celebrities that backed Bitcoin. This paper aims to analyze the impact that twitter posts have upon the evolution of Bitcoin, coupled with Tesla’s investment and recent statement of introducing Bitcoin as a method of payment in the near future. Our research tries to determine if the news and social media posts, such as tweets have an influence upon Bitcoin’s volatility and fluctuations.
Highlights
2009 is the year that marks the creation of a decentralized “peer to peer” financial system called Bitcoin, by Satoshi Nakamoto, a Japanese programmer
Using Twitter, data was analyzed to measure how the news on the media platform on the adoption of a new technology may impact the reputation of the companies analyzed, the findings showed a positive correlation on the volume of tech-related tweets and on the sentiment expressed in the tweets themselves, even if patterns of the two effects are different (Caviggioli, 2020)
As previous research proved that there is a correlation between big volumes of tweets and bitcoin prices, we look at Tesla’s influence following the news of investment in the cryptocurrency as a giant in the tech industry
Summary
2009 is the year that marks the creation of a decentralized “peer to peer” financial system called Bitcoin, by Satoshi Nakamoto, a Japanese programmer. Since the “cryptocurrency” concept first appeared in 1998, being introduced by Wei Dai (Okhuese, 2017), Bitcoin is considered to override the fiat currency in various aspects, given its transnational dimension, as it can be transferred across borders bereft of restrictions. Decentralized virtual currency blueprint characterized by a bidirectional flow, together with a cryptocurrency. Bitcoin was a similar working mechanism with electronic cash. The cryptocurrency can be acquired from different platforms/websites, exchanged for the domestic currency, with an exchange rate driven by the market, as a result of the supply and demand function. Bitcoin is covered by the veil of volatility, coupled with the degree of people’s acceptance, which is bound to diminish, given the increasing number of users adhering to the network (Kaushal et al, 2017)
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