eToro Launches Crypto Portfolio Weighted by Twitter Mentions

With an AI system trawling through that massive trove and multiple benchmarks to compare it against, the network calibrates an optimal crypto portfolio based on the sentiments of those tweets, Joshua Frank, CEO of The TIE told CoinDesk.

At launch, the portfolio included five different crypto assets: 47.24% stake in DASH; 23.92% EOS; 21.86% XRP; 5.01% MIOTA; and 1.97% ETC. It rebalances every month.

Frank's theory: there's no better intel source for crypto market movements than Twitter - "Kind of the epicenter of the crypto universe."

Without any of the normal metrics driving stock market values in crypto, investor sentiment takes a leading role in determining the value of different crypto assets, he argues.

Like a great swirling ball of pump-and-dump news blasts, the 50,000-odd daily crypto tweets that The TIE's algorithm sweeps up from Twitter's daunting 850,000,000 daily output drive the markets, investor sentiment, and ultimately, the price of different crypto assets.

The companies back tested their algorithm against two years of crypto Twitter content, from October 2017, and found that the resulting portfolio would have returned 281% returns after fees.

A portfolio of the same crypto assets would have only returned 29%. How it Works.

Even before the algorithm squashes bots, and long before it makes a judgement as to whether a tweet employs positive or negative sentiment, it must intuit whether the tweet is actually about crypto.

Stuart Colianni, a Machine Learning graduate student at Georgia Tech, who studied the relationship between Twitter sentiment and crypto valuations as a Stanford undergraduate, told CoinDesk massive swings could be a turn-off to investors.

It's all in the name of bolstering crypto's mass adoption, said Hirsch, the eToro manager.