By CCN.com: Augmento is an artificial intelligence platform that analyzes trends and data to “augment human decision-making.” The firm posted the results of its look into the bitcoin bear market today with an eye toward determining if crypto winter is truly over.
Augmento’s algorithm categorizes social media mentions of cryptocurrency in several ways – everything from “FOMO” (fear of missing out) to “annoyed.” The company believes that for a bull run on the order of 2017 to take place again, sentiment must reach a point of calm.
“First of all, we find that Twitter becomes extremely emotional when big price actions take place. Examples are January 2017 (BTC broke above $1k), November 2018 (BTC fell below $6k), and April 2019 (BTC jumped from $4k to $5k). One might wonder why emotions did not peak when prices peaked. One explanation could be — and you might remember the emotional roller coaster — that emotionally loaded discussions kept on for a while when the market turned from bull to bear. But sentiments did not drastically change their intensity and instead kept rising.”
Specific segments of “Crypto Twitter” will obnoxiously shill crypto no matter the situation. AI can deal with these people categorically by identifying the density of their zeal. When looking for a broader trend and correlations with price action for cryptocurrencies, the algorithm needs much bigger indicators.
“The eScore tells us that for such a bull run to happen again we would have to experience a similar emotional surge as in 2017. […] The question is, however, if such an uptrend is still possible. The indicator currently oscillates above 0.5. That means more than 50% of the conversation is emotionally loaded. For an emotional uptrend á la 2017 the eScore would first have to drop much more before being able to rise that much again.”
The researchers conclude that a much greater swath of people will have to enter the market.
The analysis assumes that social media sentiment is a serious indicator of the price movement. Historically, this may have been accurate, but plenty of the big boys – hedge funds and the like – don’t share a unified social media presence to gauge “sentiment” on.
Social media sentiment is probably just one more way to gauge the rolling tides of crypto markets. It shouldn’t be mistaken for more reliable chart analysis or wisdom gained through experience.
Some believe Bitfinex may be using its massive resources to manipulate the market. Such conspiracy theories cannot be proven with existing technologies or available data.
People have known for a long time that major exchanges like Bitfinex potentially wield power to manipulate the bitcoin price.
Last modified: March 4, 2021 2:31 PM