Media matters: Understanding the impact of media coverage on the Bitcoin market

Abstract

O ver the past decade, Bitcoin has experienced a meteoric rise from a niche digital currency, experimented with by cryptography enthusiasts and technologists, to a globally recognised financial asset class adopted by the world's largest institutions, companies, and even nation states 1,2 .Alongside this rapid adoption, the asset has experienced tremendous growth in both usage and, of course, price.Bitcoin was the best-performing financial asset in 8 out of 11 years since 2013 and returned, on average, an astonishing 671% per year 3 .These outsized returns do not come without substantial risk.While the longer-term track record of Bitcoin is clearly positive, the asset class is also extremely volatile.Indeed, in the years where Bitcoin was not the bestperforming asset, it was the worst-performing asset -posting drawdowns of -58% in 2014 and -73% in 2018 3 .Due to this combination of high risk and high reward, any models or tools that provide predictive or explanatory power of the Bitcoin market could be extremely valuable.