Ethereum Volume Is Influenced By Twitter Activity, Report Claims

The price of Ethereum lost more than 40% in a single week and has been hovering around $100 on the day which is now considered the new Black Thursday in the crypto and traditional markets. Currently, the Ethereum volume is stable and the cryptocurrency is trading at $127 with fears of a new potential drop.

As the cryptocurrency news show, Ether (ETH) has bounced back slightly to trade in the $120 to $130 range. However, in 2017 both Ether and Bitcoin saw a great increase in prices which is how ETH got the title of the largest altcoin by market cap. A new report indicates that the number of tweets reaching an average of 12,622 daily tweets during that year had something to do with the price of the cryptocurrency.

In 2018, a year where Ether produced a -78.6% in returns, the average number of tweets increased to 15,029 which was the highest across the years. In 2019, the ETH news showed that the Ethereum volume decreased substantially and the tweets did the same, falling to number of approximately 4,621 daily tweets.

When analyzing the relationship between the daily volume of Ether and the daily number of tweets mentioning Ethereum, we can see a significant relationship found throughout 2017. When the number of tweets increased by 1%, the Ethereum volume would increase by 1.61% during the same day.

A similar positive relationship was noticed when trying to predict future trading volume using daily tweets as the predictor. When the number of tweets increased by 1%, the trading volume of Ether would increase by 1.58% the next day.

In 2018 ,the relationship between the tweets mentioning Ethereum and the transaction volume was positive but in a smaller magnitude than the timeframe that was observed in 2017 when the number of tweets increased by 1% – which is when the volume would increase by 0.32%.

When looking at the predictability of tweets for the next day’s volume, a smaller influence of tweets is observed compared to the one shown in 2017. In 2020, the correlation between the tweet activity and the Ethereum volume is similar which shows that the increase in tweets have a slight effect of causing a reduction into the buying and selling of Ether (ETH), in line with discouraging returns outlook for investors.