The year 2017 was the year of cryptocurrencies. They were not that exposed as a topic in general speak, however in few short months they became global investment phenomenon and a speculative bubble. By the end of 2017, the Bitcoin price has exploded and reached almost $20,000 per 1 Bitcoin. This rapid rise was also well reported in the mainstream media. In a way, it showed that media is not there just to report, but that it in many cases co-creates the story they are reporting on.
In this article, we are drawing data from a study conducted by CLOVR. They tried to find correlation between media coverage and the price changes of cryptocurrencies. They have also researched how certain categories of media reported on the crypto boom to scout for the bias in their reporting.
As seen in the chart above, there is a co-movement between prices and news coverage. The correlation itself is not indicating there is a causal relationship between prices and the coverage or vice versa. We can’t directly say if the rise in prices caused increased coverage or if the increased coverage enticed more people to go out and buy cryptocurrencies like Bitcoin, which eventually further fueled their price appreciation. Naturally one also has to take into account that not all coverage is positive, so in some sense a negative correlation is possible too, and as we can see it was present during the end of 2017 and beginning of 2018.
What is quite interesting is the fact that before the price rise, cryptocurrencies weren’t and interesting topic for the mainstream media. The coverage blowout started with the rice of prices in mid-2016. The coverage growth moderated as the prices started falling, however, as mentioned, the rapid the price drop, the more coverage was happening. This was result of the fact that negative news are often more interesting than positive ones due to humans high risk aversion that discounts losses heavily and prefers to avoid them.
There are various explanations why the prices dropped, but due to the fact that there was little rationality in the demand for the cryptocurrencies in 2017, and much more speculative thirst for fast profit, it was reasonable to expect the market to turn.
The Bias in the Mainstream Media Reports on Cryptocurrencies
Bias might be a bit too strong of a word, however, certain categories of media did report on Bitcoin differently than others. In total, positive coverage was seen until 2016, however, as the reports on the price appreciation amassed so did the negative reporting increase as well. When the prices of Bitcoin and other cryptos dropped, stories of lost wealth took over the media landscape.
Media that were part of categories finance and technology, as well as left leaning media were overwhelmingly publishing positive stories as is seen from the chart above. Predominantly negative news was published on right leaning media. This is curious considering that conservatives are usually tied to deregulation and free market exchange in the US. It is also possible that the fact that the right also values security and fight against crime, they see cryptocurrencies as a threat.