Study Shows Forum Comments Can Predict Bitcoin’s Price with Over 80% Accuracy
A research paper published last week shows that forum user comments can be used to predict the value fluctuation of bitcoin to an accuracy of over 80 percent.
Study Funded by Korean Government
A research paper entitled “When Bitcoin encounters information in an online forum: Using text mining to analyse user opinions and predict value fluctuation” was published last week. It is co-authored by five researchers from two universities in South Korea; Korea University and Kangnam University.
This study was supported by Basic Science Research Program through the National Research Foundation of Korea (NRF) funded by the Ministry of Education, Science, ICT and Future Planning. It is also funded by the Korean government through Institute for Information & communications Technology Promotion (IITP).
“In order to predict the price fluctuation of bitcoin, we analyse the comments posted in the Bitcoin online forum,” the authors wrote, referring to the Bitcointalk forum, adding that:
Our approach involved extracting keywords from Bitcoin-related user comments posted on the online forum with the aim of analytically predicting the price and extent of transaction fluctuation of the currency.
The Method
The method used in this study involves data extraction, data gathering, data analysis and model development. Keywords of interest from user comments were extracted as well as daily bitcoin transaction counts and prices.
Data were crawled from the “Bitcoin Discussion” section of the Bitcointalk forum from December 1, 2013, to September 21, 2016. The daily bitcoin price and the number of transactions for the above period were crawled from Coindesk. In addition, Google Trends data and Wikipedia usage data were gathered using the keyword “Bitcoin”.
The relationship between the Bitcoin transaction count and price based on the extracted keywords and quantification was analyzed. “Then, we developed a model based on deep learning to predict the Bitcoin transaction count and price,” the paper details.
Over 80% Accuracy
After extensive analysis, the researchers concluded:
We analysed the user comments posted on a Bitcoin online forum to predict the fluctuation in the bitcoin price and transaction count. Based on the easily accessible online data, the proposed method predicted the bitcoin price fluctuation with an accuracy rate of over 80%.
“Online user postings influenced Bitcoin transactions,” the authors found, claiming that their method shed light on some aspects of how comments affect users’ decisions to buy and sell the cryptocurrency.
They then suggested various ways of improving the accuracy of prediction such as using quantitative analysis on search results or relevant content. Forum posts could also be filtered more meticulously for added accuracy.
In conclusion, they asserted that their method “is conducive to understanding a range of cryptocurrencies other than bitcoin and increasing their usability,” adding that it can also be useful in many other fields.
Do you agree with their finding that forum user comments can predict bitcoin’s price fluctuation with more than 80% accuracy? Let us know in the comments section below.
Probably, the price goes up when people talk about buying it, and goes down when people talk about selling. I don't know about 80% accuracy, but certainly the group mentality concept applies to these sorts of things.
@justtryme90 That does have a say in price determination. But the actual accuracy comes from taking varoius different aspects like number of transactions, asks, bids, the previous price graph together and running them against a complex algorithm
Many have found Clif High's Webbot to be extremely accurate regarding the Price of Bitcoin. So yes it does follow that this is true.
@ctrl-alt-nwo . Dont Know about the Bot , but Information derived from data in itself is a very huge thing and can explain a lot of things.
Thanks for sharing, verry interesting research!
You are welcome @skririm
So, everyone who wants to enter the crypto-currency market, first of all, what needs to be understood is that the market has already been formed, and now a division begins, that is, trade, and this is the only way to earn real money now. With the same 3-4 thousand dollars of the value of the crypto-farm, which will pay off at best not earlier than half a year is better spent on the game on the stock exchange, or given to normal traders. And you will definitely increase your investments for half a year three times at least. And the risks of investing in a farm and a stock exchange are the same, if the market bursts, then there will be no sense in the farm, it's easy.
https://www.cleveroad.com/blog/see-how-to-create-a-bitcoin-wallet-app-to-use-cryptocurrency-wisely
Interesting article. I was about to start a similair discussion. Though prices might seam inflated for now I don't think they will look like this 2, 3 years from now. Personally I always use: https://www.coincheckup.com Every single coin can be analysed here based on: the team, the product, advisors, community, the business and the business model and much more. Check: https://www.coincheckup.com/coins/Bitcoin#analysis For the Bitcoin Investment and research analysis.