This is an opinion editorial written by Thierry Berger, a graduate of the University of Applied Sciences in Business Administration Zurich, based on his thesis “Bitcoin: How Social Media Influences Private Investors in Their Actions. “
A friend introduced me to the basics of Bitcoin years ago. I couldn’t believe my eyes when I looked at the price hike over the past few years after our conversation and wondered: is this altcoin going to keep going higher, or is it one big Ponzi scheme that will soon collapse in on itself?
I started reading about it and quickly realized that Twitter influencers were often playing with the emotions of their audience — with fear and greed, to name the most common emotions. I didn’t believe some of the exaggerated posts, and yet I was drawn in.
It was clear to me that social media influenced individuals in their actions when it came to Bitcoin. In my studies, I learned about many theories and models in media psychology, which I can apply in the bitcoin market and which may help others to do the same.
Concepts of Media Psychology and Bitcoin Twitter
the The uses and gratification theory It assumes that recipients choose the medium that can best meet their needs. Depending on the medium, the person seeks information, entertainment, personal identity (the promotion of one’s own values), or integration and social interaction (exchanges between like-minded people). For me, I mix all four motives at once.
The concept of engagement, which implies that a recipient can still engage in the content of an article even days after they have read it, if that person has been directly affected by the developments or opinions that have been shown. However, this does not mean that attitudes can be changed permanently. The more involved the individual arbitrator is with a topic, the less he or she will be influenced by persuasion from other opinions. The interaction between feelings of greed and fear, and the resulting tension, diminishes over time and with experience.
In my environment, everyone, without exception, confirmed this phenomenon. After buying bitcoin for the first time, for example, you are easily manipulated. With each additional hour you deal with it, your opinion becomes stronger. You can accept price distortions more easily and, in the meantime, see the incentive to buy seating at a lower price.
Paying attention to why you are on Bitcoin Twitter in the first place, and how the content affects you, will help you navigate it.
How to deal with Bitcoin Twitter
The massive price gains are, in my opinion, the strongest narrative that draws retail investors into the bitcoin market. The most common type of post I see on Bitcoin Twitter is positive price predictions. These generate clicks, and they have the potential to spark fear of missing out (FOMO) and tempt private investors to make impulsive purchases.
How strongly an individual reacts to information with positive connotations, or information with negative connotations in a phase of strong price decline, and whether action results, ultimately depends on the motivation and feelings experienced in the recipient, as well as the behavior of consumer influencers. But the natural human trait of being guided by emotions means that new investors can push higher prices at the end of a bull period and sell those positions at a loss when prices correct, for fear of a complete crash. This is why anyone who enters the Bitcoin space in this way must keep in mind the psychological factors at play.
One suggestion I have is to stay tough. If someone’s investment goes into the red, their mood usually goes down. But losses and gains don’t materialize if you don’t make a refund. But I think four out of five people aren’t emotionally attached to this. This is where you have to be tough as nails. There’s an old wisdom every private investor should delve into: You can never get caught in two things, up and down. “Simply doing nothing” is the best historically in a market that is on the rise over the medium to long term.
Another valuable lesson for me was realizing that in today’s globally connected world, it’s becoming increasingly difficult to separate click hunters and scammers from valuable content with strong communities. This means that someone who wants to learn about Bitcoin via Twitter must first do the work of “separating the junk from the good” in their own research. An investment should never be made based on just one opinion or source.
media manipulation
Media manipulation is by no means a new phenomenon, and media history shows that it can hardly be eradicated with regulation.
But social media accelerates the impact of contributions and broadens spheres of influence, exacerbating the problem. My goal is to stimulate critical interaction with the media, even knowing that this is a globally challenging endeavor. After all, being able to critically examine one’s media and emotional reactions will be of great benefit in all areas of life.
This is another guest post by Thierry Berger. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.