MINING NEWSDESK: Do Media Mentions Affect the Exchange Rate of Bitcoins?

May 14, 2013 John Van der Wal Leave a Comment

A topic that has been growing in popularity is “crypto-currencies” with the most common of these being Bitcoin. Bitcoins are a digital currency that are bought on an exchange and then used to anonymously buy and sell goods online. If you haven’t heard of them, check out this video.

Bitcoin’s pricing has proven to be very volatile. For example, on April 10^th the exchange rate of one Bitcoin dropped from $230 to $165. With a 28% plunge in just one day, wouldn’t it be useful to see if there are any indicators of whether Bitcoin will rise or fall over the next days? To get some insight, we pulled data from our media monitoring product, Newsdesk, into Excel and matched it up against historical data for Bitcoin’s exchange rates.

Unlike gold or a publically traded stock, Bitcoin’s pricing is not tied to any physical assets so it is vulnerable to fluctuations not normally seen in stocks.

Digging deeper with Newsdesk, we wanted to see how much the media’s hype about Bitcoins seemed to impact its price. As the graph below shows, trading volume seemed to lag after media mentions. This makes sense since a lot of the people using Bitcoins aren’t necessarily professional traders, so there is a disconnect between the information available and the market’s pricing; often a full day lag from media mentions to a spike in volume.

As shown here, simply using media mentions to determine the increase or decrease in Bitcoin’s exchange rate is an imperfect model.

As we move forward in an increasingly digital world, it will be interesting to see what role Bitcoins continue to play; whether they will be considered an investment or simply someplace to flee when traditional currencies have problems. Until then, if you’re a Newsdesk user and want to follow Bitcoins, or to delve deeper into your company’s online mentions, here is a simple way to download an analytics feed:

1. Click the Search Tab
2. Click New Search
   1. Select News only
   2. Search term: bitcoin*(* is a wildcard that searches for bitcoin, bitcoins, etc)
   3. Default search settings: English only, 60 days, all languages
   4. Save
   5. Click Analytics Tab
      1. Line graph, 60 Days by Day
      2. Drag Bitcoin feed over, Click “View Analytics”
      3. Download -> Feed Statistics (Excel)

For the examples in this post, we copied the Bitcoin trading data from here and put it together with the exported Newsdesk coverage in Excel. Excel allows us to easily dig through both sets of data to identify any hidden trends we wouldn’t see otherwise.

Can you think of any topics you’d like us to mine for in Newsdesk?

Filed under: market intelligence,Newsdesk,Newsdesk features,Uncategorized,web aggregation