Research shows that forum comments can predict Bitcoin prices with an accuracy rate of up to 80%

A research report co-authored by five researchers from two major Korean universities (Korea University and Gangnam University) shows that forum user comments can be used to predict Bitcoin price fluctuations, and the accuracy of this method is as high as 80%.

Research funded by the Korean government

The research paper, titled "When Bitcoin Meets Online Forums: Using Text Mining to Analyze User Opinions and Predict Price Fluctuations," was published last week. It is worth mentioning that the research was also supported by the Basic Science Research Program of the National Research Foundation of Korea (NRF), and the South Korean government also funded the research through the Information and Communication Technology Promotion Association.

“To predict Bitcoin’s price volatility, we analyzed comments posted on an online Bitcoin forum (Bitcointalk),” the authors wrote. “Our approach involves extracting keywords from Bitcoin-related users’ comments on the forum, with the goal of analyzing and predicting Bitcoin’s price and trading volatility.”

method

The methodology used for this research involves data extraction, data collection, data analysis, and model development. The researchers extracted keywords from user comments, as well as daily Bitcoin transaction volumes and prices.

The study captured the Bitcoin discussion on the Bitcointalk forum from December 2013 to September 21, 2016, and the daily Bitcoin price and trading volume were captured from Coindesk. In addition, the study also used Google Trends data for the keyword "bitcoin" and Wikipedia usage data.

The researchers analyzed the extracted keywords and quantified the relationship between the number of Bitcoin transactions and prices. "Then, we developed a deep learning-based model to predict the number of Bitcoin transactions and prices," the paper wrote.

Over 80% accuracy

After an extensive analysis, the researchers concluded:

“We analyzed user comments on online Bitcoin forums to predict Bitcoin price and transaction volume fluctuations. The accuracy of our prediction method based on easily accessible online data is over 80%.”

The study’s authors found that online users’ posts influenced Bitcoin transactions, and claim their methodology reveals how comments influence users’ decisions to buy and sell cryptocurrencies.

They then proposed various methods to improve the accuracy of the predictions, such as using quantitative analysis of search results or related content. In addition, the study could filter forum posts more finely to increase the accuracy of the predictions.

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