Get the latest cryptocurrency news, updates on trading, and insights into Bitcoin and other digital currencies. Plus, high-profile interviews, explainers, and unique stories that you won’t find anywhere else.
A fascination with cryptocurrencies is driving significant activity in these markets. But it’s hard to gauge whether this interest is based on an actual need for these alternative forms of money or merely a desire to make fast profits from the huge fluctuations in their prices. For example, one bitcoin has more than quadrupled this year and dropped nearly as low as $2,000. The market value of all cryptocurrencies now exceeds $1.5 trillion, an extraordinary amount for objects that are nothing more than computer code.
Cryptocurrencies are appealing to some because they allow them to send money quickly and without the need for a middleman like a bank. They also offer a measure of anonymity, and dissidents in authoritarian countries have raised funds in bitcoin to circumvent government controls. Regulators are paying attention, too. They have seized large quantities of cryptocurrencies used in criminal activities, and they are seeking ways to regulate the industry.
This study uses quantitative sentiment analysis to examine how news affects the price and volatility of individual cryptocurrencies and the overall cryptocurrency index. It finds that positive news increases cryptocurrency prices and volatility, while negative news decreases them. The oldest cryptocurrency, Bitcoin, exhibits a negativity effect, while younger cryptocurrencies experience an inverted asymmetric volatility pattern. These findings have important implications for the design and operation of cryptocurrencies.