I don’t think you’ll find it hard to believe that social media has had a major impact on cryptocurrency and bitcoin trading. Because hey, it isn’t news that social media impacts and influences almost everything under the sun. But when it comes to cryptocurrencies, in particular, ask any common man, and they will tell you that social media was their primary introduction to the topic.
But, social media has gone beyond mere introduction. It has impacted the value of various assets, spanning cryptocurrencies, forex, commodities, stocks, and more. For example, if you check Microsoft stock price today, you will find the influence of social media there, too.
All this might make you wonder how social media manages to have such a significant influence on cryptocurrency and Bitcoin trading. Well, there are several reasons why that happens. To know what those are, keep reading.
Spread Of Information
Since the beginning of time, social media platforms like X, Reddit, Instagram, etc., have provided people with the space to hold in-depth discussions about everything, including cryptocurrency. Because of this, newer ideas and beliefs come to the surface, older ones get discarded, and people become less skeptical of dealing with cryptocurrencies altogether.
On top of this, there are groups and communities on social media platforms that actively exchange information on all things crypto. For example, they talk about top sites where people can buy cryptocurrency, how they can use it for payments, etc. This increases awareness and people’s knowledge about the topic.
Besides this, news spreads like wildfire on social media platforms. This helps in communicating the latest developments, major updates, technological advancements, etc., rapidly. Since the right news reaches people at the right time, it becomes possible for them to decide their next course of action accordingly.
Market Sentiment
It’s hard to believe that social media has enough power to influence an entire market, but it is very true. All the discussions held on various platforms collectively influence market movement. For example, when positive discussions regarding a particular cryptocurrency take place, its value rises. Whereas, when people share negative feedback on some kind of cryptocurrency, its value can go down drastically and even make buyers give up on it.
This implies that the information shared has a significant impact on buyer’s behavior, trading strategies that traders will use, and the overall cryptocurrency market.
However, sometimes, the influence can be negative, too. For example, a section of traders can artificially increase the value of a cryptocurrency, create hype around it, urge people to buy it at that increased price, and reap profits for themselves. The sad part is this is fairly common on social media.
Hype And Fomo
Trust social media to create hype about anything– however little or huge it may be. So, when it comes to cryptocurrencies, not only did social media introduce it and create awareness about it, but platforms like Instagram, Reddit, and Twitter did a commendable job at hyping the whole thing up.
For example, memes and crypto influencers, in particular, create a sense of urgency among people and make them want to try out cryptocurrency. They make it seem like if someone is not buying and using Bitcoin; they are missing out on a lot of fun. On top of that, in some circles, people who are not open to cryptocurrency are made to feel like outliers.
What further fuels this fire are things like Tweets by famous, influential people. For example, in April 2021, Musk tweeted about Dogecoin, and that was it. Within a single day, Dogecoin’s value had skyrocketed.
Crypto Influencers
Cryptocurrencies and social media together have given rise to a whole new profession: crypto influencers. Think of them as influencers with large followings on social media and content revolving around everything related to cryptocurrency, and you will get what they are all about.
Since they are seen as reliable sources of information, they have significant influence and say in how the market is going to work and in which direction it is going to progress. For example, it’s not uncommon for the values of different kinds of cryptocurrencies to fluctuate just because XYZ influencer said something about them. In fact, people literally decide what kind of cryptocurrency they should use on the basis of what their go-to influencer says.
But, the downside of this is that there’s no regulatory body for these crypto influencers and there’s no barrier to entry either. This means literally anyone with little to no knowledge can become an influencer and start giving out ill-informed, biased advice. I will leave you to imagine the horrors of the same.
Final Words
Okay then, people. This is how social media discussions influence the impact of cryptocurrency and bitcoin trading. In this article, we explored several ways that social media can have an impact on the two. And well, although the influence is undeniable– it is only so for the short-term dynamics. In the longer run, what will still hold a larger influence are other major factors like technology, regulatory developments, etc.
