Reddit’s Crypto Communities Reflect Market Realities
Reddit has been one of the largest forums for cryptocurrency fans since the early days of the technology. But as prices rise and fall, subscribers to a particular coin’s subreddit are liable to come and go. That raises the question: to what extent do Reddit’s big crypto subreddits reflect the realities of the market?
Before we go into details, let’s be clear: this is just for fun. You should not make investment decisions based on Reddit’s highly manipulatable user counts, and there are a few problems with this data (more on that later).
To start, we calculated the total market cap of the current top 20 cryptocurrencies (based on CoinMarketCap data from March 13), and each individual coin’s market cap as a percentage of that total. For example, Bitcoin’s $68 billion market cap accounts for 57% of the total top 20% market cap, whereas DASH’s $790 million market cap accounts for just 0.66% of it. Then we did a similar calculation for Reddit users, counting the subscribers in each of the 20 coins’ primary subreddits, and then calculating that subreddit’s subscribers as a proportion of the total crypto subscriber count.
In the chart above, we have subtracted the first percentage (market cap) from the second (subscribers) to measure the difference between the two. A negative (pink) bar suggests that the number of Reddit subscribers is smaller than you might expect based on market cap; a positive (blue) bar suggests that there are more subscribers than you’d expect based on the coin’s market cap. So, for example, Ethereum’s market cap accounts for 11.7% of the total, but its Reddit subscribers make up 16% of the total, so it has more fans on Reddit than we might expect, if Reddit followings perfectly mirrored the market.
As you can see, though, Reddit followings actually do track pretty closely with what we would expect based on each coin’s market cap. Only two coins showed a difference of more than 5%, and the largest discrepancy - Bitcoin - might be explained by other factors.
There are lots of problems with using Reddit subscriber data for any serious analysis, since user accounts can be purchased and subscribed to make a community look larger than it is. There’s also a lot of subreddit overlap, and this is particularly true of Bitcoin. The calculation above uses numbers from the largest subreddit for each coin, but aside from /r/Bitcoin, there may be Bitcoin fans who only subscribe to /r/btc, or even /r/cryptocurrency since it covers most Bitcoin-related news.
But although it’s rather unscientific, subreddit followings do appear to track pretty closely to the market.