A recent report from BlockchainDefender explores the reputation of the cryptocurrency industry and its impact on its global market capitalisation. The report features multiple studies that have slightly different focuses, all with a common theme related to online sentiment and its effects.
How A Crisis Impacts Market Capitalisation and Price
Within the BlockchainDefender report, you will find a case study that looks at a crisis that an unspecified cryptocurrency experienced in 2018 following a hack. The report looks at how this crisis affected the crypto’s online sentiment, price and market capitalisation.
Before the crisis occurred, the crypto in question had a better than average online reputation. In the US, UK, UAE, Japan, and Germany, only 1.3% of content was negative, while 34.2% of content was from official sources and 37.5% of content was neutral.
Immediately following the crisis, the crypto’s online sentiment dramatically changed. Positive content from third parties, which had been at 16.4%, dropped to just 2.4%/. Meanwhile, negative content rose from 1.3% to a disappointing 23.4%. This change in sentiment also included a drop in market cap of $55.5 million and a drop in price.
Few will be surprised that prices, market cap and sentiment were all negatively affected by the crisis. However, the report also compares the impact of the crisis in the East and the West. The online sentiment regarding the crypto in the West experienced a much more dramatic swing towards the negative. Following the crisis, negative sentiment reached 47.55% in the US and 40.65% in the UK. Despite these figures, 72% of the content in the UAE remained neutral, as did 52.9% in Japan.
To be thorough, BlockchainDefender also explored sources of negative sentiment following the crisis. The largest portion, 20%, came from crypto market news. Mainstream news accounted for 5% of negative sentiment, while 3% came from forums.
BlockchainDefender ran the numbers based on its research and found that the increase in negative content for this cryptocurrency may have dissuaded up to 65,000 potential engagements.
Additional Trust-Related Findings
The above case study is just a small part of the BlockchainDefender report. This report also shows a connection between positive online sentiment and larger search volumes with higher market caps for cryptocurrencies. The report additionally outlines how crypto exchanges face more challenges regarding reputation management compared to traditional exchanges.