BlockchainDefender understands the effort required to create a strong online reputation, as well as how quickly that reputation can be damaged. The company recently released a report that looks at how a lack of trust affects the global market capitalisation of the cryptocurrency industry. The recent BlockchainDefender report looks at the many challenges cryptocurrencies face when it comes to encouraging trust, as well as the ways that those challenges impact their bottom line.
The Relationship Between Market Sentiment and Market Capitalisation
The first section of the BlockchainDefender report looks directly at the connection between these two factors. The team uses quantification and analysis of online sentiment to show the connection with a crypto’s financial performance. BlockchainDefender relied heavily on data from Google AdWords, including total search volume. The report categorises mentions of each cryptocurrency brand as neutral, positive, or negative.
The BlockchainDefender report indicates that when Google searches and online sentiment for a digital currency increase, there is a similar rise in the global market cap.
The report continues by looking at the decline in search volume and rise in negative market sentiment that occurred regarding crypto between January and March 2018. This was accompanied by a sharp fall in market capitalisation. The period between April and July 2018 saw a stabilisation of these figures as well as a plateau.
BlockchainDefender interprets this as a clear indication that market sentiment and search volume correlate with market capitalisation in the case of cryptocurrencies.
Comparing Crypto and Traditional Exchanges
Next, BlockchainDefender makes a comparison between the online reputations of traditional exchanges and cryptocurrency exchanges. Once again, the data reported is clear, this time indicating that traditional exchanges have better control of their online reputations. They have had time to create official channels that allow for control of their reputations. By contrast, crypto exchanges have less control and more negative online sentiment.
Examining a Cryptocurrency Crisis
Finally, the BlockchainDefender report explores the impact of a cryptocurrency crisis on market capitalisation. The crisis in question was a hack that led to a drop in trust. BlockchainDefender explores overall results as well as variations among five countries. Before the crisis, the crypto had almost no negative sentiment online. Following the event, this negative sentiment increased by 22.1%. Interestingly, the UAE and Japan largely continued displaying neutral sentiment towards the crypto following the crisis, while the negative impact in the US and UK was stronger.
The BlockchainDefender report highlights the important role that reputation plays in the crypto industry by confirming that reputation is linked to market capitalisation.
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