How Does Social Media Impact Bitcoin Value? A Test of the Silent Majority Hypothesis

Journal of Management Information Systems, 35(1), 19-52, 2018

Posted: 18 Jan 2015 Last revised: 12 May 2018

See all articles by Feng Mai

Feng Mai

Stevens Institute of Technology - School of Business

Zhe Shan

University of Cincinnati - Department of Information Systems

Qing Bai

Dickinson College

Xin (Shane) Wang

University of Western Ontario - Richard Ivey School of Business

Roger Chiang

University of Cincinnati - Department of Information Systems

Date Written: November 6, 2017

Abstract

Bitcoin’s emergence has the potential to pave the way for a technological revolution in financial markets. What determines its valuation is an important open question with far-reaching business and policy implications. Building on Information Systems and Finance literature, we examine the dynamic interactions between social media and the monetary value of Bitcoin using textual analysis and vector error correction models. We show that more bullish forum posts are associated with higher future Bitcoin values. Interestingly, social media’s effects on Bitcoin are driven primarily by the silent majority, the 95% of users who are less active and whose contributions amount to less than 40% of total messages. In addition, messages on an Internet forum, relative to tweets, have a stronger impact on future Bitcoin value. Overall, our findings reveal that social media sentiment is an important predictor in determining Bitcoin’s valuation, but not all social media messages are of equal impact. This study offers new insights into the digital currency market and the economic impact of social media.

Keywords: Bitcoin, cryptocurrencies, digital currency, fintech, social media

Suggested Citation

Mai, Feng and Shan, Zhe and Bai, Qing and Wang, Xin (Shane) and Chiang, Roger, How Does Social Media Impact Bitcoin Value? A Test of the Silent Majority Hypothesis (November 6, 2017). Journal of Management Information Systems, 35(1), 19-52, 2018. Available at SSRN: https://ssrn.com/abstract=2545957 or http://dx.doi.org/10.2139/ssrn.2545957

Feng Mai (Contact Author)

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

Zhe Shan

University of Cincinnati - Department of Information Systems ( email )

606 Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 210211
Cincinnati, OH 45221-0211
United States

Qing Bai

Dickinson College ( email )

Carlisle, PA 17013
United States

Xin (Shane) Wang

University of Western Ontario - Richard Ivey School of Business ( email )

1255 Western Road
London, Ontario N6A 3K7
Canada

Roger Chiang

University of Cincinnati - Department of Information Systems ( email )

606 Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 210211
Cincinnati, OH 45221-0211
United States

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