Alibaba and Waltonchain: how social media knew first.
Today, prominent IoT cryptocurrency Waltonchain ($WTC) announced that Alibaba ($BABA) would be signing a “Strategic Partnership” to use Waltonchain in Smart City development across China. What’s interesting, however, is that:
News of this partnership was leaked on social media many hours before it was officially announced… and before Waltonchain’s value increased by ~40%.
How could this happen?
Well, in the unregulated wild west of cryptocurrency, market moving news does not need to be officially announced when the markets are closed, in fact the markets never close. A coin can simply post a Tweet on their page, which subsequently can move the cryptocurrency’s value — without any repercussions.
How is market moving news leaked online?
The question is not how — there are over 500 million tweets posted each day, it is inevitable that tweets by influential accounts will effect financial markets. Consider accounts such as:
- McAfee founder and Crypto influencer: John McAfee
- Litecoin founder: Charlie Lee
- Ethereum Classic and Cadano founder: Charles Hoskinson
These accounts, amongst others, frequently effect cryptocurrency valuations with their tweets. Instead, the question should be rephrased as:
How can you find market moving news, before it becomes mainstream knowledge?
This is easier than you may imagine given the quantity of social media content posted every second. The problem can be roughly boiled down to:
- Reduce the noise. Get rid of the affiliate links, spam, bots etc.
- Identify what company / crypto a tweet is talking about. This is easier said than done. Did you know, the stock ticker “$GSS” is used by 5 different companies?
- Grade the tweet by its “market impact”. Alternatively, given all the tweets which have moved markets in the past, can we build an algorithm to predict if a new tweet will move a market at this moment in time? This process need to consider various features e.g. source authenticity, tweet text etc. This can also be referred to as “the holy grail”.
This is the problem that Scoop Markets tries to address.
In this instance, our algorithm identified the Waltonchain / Alibaba partnership, 34 hours before it was announced, by analysing thousands of tweets every second.
So what actually happened?
34hrs before the move — 6am, 5th March
Scoop alerts our users to the following image showing a meeting between Alibaba and Waltonchain representatives.
20–34hrs before the move
The rumour starts to spread across social media. People start going LONG on Waltonchain resulting in an increase in social media activity.
4pm, 6th March
Waltonchain confirm the rumour.
Shortly after the tweet
Waltonchain’s valuation increases by 40%.
This article was collated by Scoop Markets.
Scoop is the breaking news & analytics dashboard for stock & crypto traders.
- Our algorithm analyzes thousands of tweets every second to identify breaking news, before it breaks.
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