Social media disagreement and financial markets: A comparison of stocks and Bitcoin
DOI:
https://doi.org/10.18559/ebr.2024.4.1683Keywords:
disagreement, trading volume, volatility, Bitcoin, RedditAbstract
We examine whether disagreement in social media discussions related to financial markets affects subsequent volatility and abnormal trading volume. We also compare how traditional and digital asset markets differ by comparing stocks and Bitcoin. We show that social media disagreement is positively associated with future market volatility and abnormal trading volume in the stock market. The effect of disagreement is more pronounced at the individual stock level than at the index level. A higher level of social media disagreement also increases the probability of extremely negative stock market returns. In contrast, disagreement in Bitcoin-related social media weakly affects subsequent volatility but does not affect trading volume or extremely negative returns. Our findings also reveal that market activity impacts the disagreement in the stock market and Bitcoin communities differently.
JEL Classification
Search • Learning • Information and Knowledge • Communication • Belief • Unawareness (D83)
General (G10)
Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets (G41)
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Copyright (c) 2024 Sergen Akarsu, Neslihan Yilmaz
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