AI reveals correlation between bitcoin price and media stance

The mood and polarity in the news can show where bitcoin is going.

The Python community released two powerful tools that are nice for investment purpose: NewsAPI and TextBlob to get the news and analyze it. Where TextBlob is the cool part. It's an AI algorithm for text sentiment analyses. It can show you if the author is subjective or passionate, positive or negative about something with respective numeric values.

I tinkered with them and found some useful information shown in this chart with the CNBC's news subjectivity and sentiment polarity against the price:

In this chart, subjectivity is ranked between 0.0 and 1.0, where 0.0 means they only talk about the matter with no emotion, and 1.0 means they got passionate; and polarity between -1.0 and 1.0, where -1.0 means they're bashing bitcoin, and 1.0 indicates they're hailing to it.

The line drawn for subjectivity means the mean line of the whole range, which divides calmness and passion, and that for the polarity divides hostility and friendliness.

On this chart, you can see that on March 29 of this year, they calmly bashed bitcoin hard (subjectivity about 0.0 shows they were not emotional at all, and polarity at about -0.3 means they were attacking harshly), and days later, bitcoin price soared until April 26. And then at that time, CNBC calmly reported the bull run (the word "bullish" can crank up the polarity to 0.1, so they were still quite neutral), and maybe non professionals like taxi drivers then put their money in. Later somewhere around May 1, the news agency went, "Wow, that's crazy. Is it good or is it bad?" And the price tumbled. After that, the news went, "Oh my God! It's so bearish," because as you can tell from the subjectivity, their mood fluctuated around the mean, and their stances were about neutral, which means there had been a lot of debates.

But then on July 6, the organization started to bash bitcoin non-subjectively again, though not as harsh as March 29 and not as emotional, subjectivity was at 0.3, quite far below mean, and the polarity was -0.2. Same story, a cup form is made, just like March 29, though they just said, "Oh, it's back up" afterward. That's why you saw a big jump yesterday.

However, it's just a correlation. It's not necessarily the news affects the price. The news is just a reflexion. I believe they can only lose their audience if they find out the pattern and praise bitcoin when the price should go up, because they're talking to a lot of technical chart analysts too. And, since bitcoin rose up amid world-wide corruption, where news agencies are tied to, they can't possibly say super positive things about bitcoin. Nevertheless, we can treat this as an indicator.

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