Emoji Driven Crypto Assets Market Reactions

29 Pages Posted: 13 Mar 2024 Last revised: 5 May 2024

See all articles by Xiaorui ZUO

Xiaorui ZUO

Fudan University - School of Economics

Yao-Tsung CHEN

National Yang Ming Chiao Tung University

Wolfgang Karl Härdle

Blockchain Research Center Humboldt-Universität zu Berlin; Charles University; National Yang Ming Chiao Tung University; Asian Competitiveness Institute

Date Written: February 11, 2024

Abstract

In the burgeoning realm of cryptocurrency, social media platforms like Twitter have become pivotal in influencing market trends and investor sentiments. In our study, we leverage GPT-4 and a fine-tuned transformer-based BERT model for a multimodal sentiment analysis, focusing on the impact of emoji sentiment on cryptocurrency markets. By translating emojis into quantifiable sentiment data, we correlate these insights with key market indicators like BTC Price and the VCRIX index. Our architecture's analysis of emoji sentiment demonstrated a distinct advantage over FinBERT's pure text sentiment analysis in such predicting power. This approach may be fed into the development of trading strategies aimed at utilizing social media elements to identify and forecast market trends. Crucially, our findings suggest that strategies based on emoji sentiment can facilitate the avoidance of significant market downturns and contribute to the stabilization of returns. This research underscores the practical benefits of integrating advanced AI-driven analyses into financial strategies, offering a nuanced perspective on the interplay between digital communication and market dynamics in an academic context.

Keywords: Emoji, LLM, VCRIX, Crypto, Bitcoin

Suggested Citation

ZUO, Xiaorui and CHEN, Yao-Tsung and Härdle, Wolfgang Karl, Emoji Driven Crypto Assets Market Reactions (February 11, 2024). Available at SSRN: https://ssrn.com/abstract=4722627 or http://dx.doi.org/10.2139/ssrn.4722627

Xiaorui ZUO

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Yao-Tsung CHEN

National Yang Ming Chiao Tung University ( email )

Department of Information Management and Finance
1001 university road
Hsinchu City, 300093
Taiwan

Wolfgang Karl Härdle (Contact Author)

Blockchain Research Center Humboldt-Universität zu Berlin ( email )

Unter den Linden 6
Berlin, D-10099
Germany

Charles University ( email )

Celetná 13
Dept Math Physics
Praha 1, 116 36
Czech Republic

National Yang Ming Chiao Tung University ( email )

No. 1001, Daxue Rd. East Dist.
Hsinchu City 300093
Taiwan

Asian Competitiveness Institute ( email )

Singapore

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