Cryptocurrency news can help traders stay on top of the latest developments in this rapidly developing market. Investors need to know where to get reliable information on the industry, from the major players to the smaller, emerging firms. Several websites and podcasts focus on breaking crypto news and feature interviews with leading figures in the space. Forbes, for example, features a wide range of cryptocurrency content, from interviews with the biggest names to guides on how to invest in this market. The A16Z Crypto Canon, a guide to the best resources on the web for learning about blockchain technology, can also be helpful.
The crypto markets are highly volatile, and there is considerable debate over their legitimacy. Proponents argue that they can empower individuals and decentralize financial markets by wresting control from central banks and Wall Street. Critics, however, warn that cryptocurrencies empower criminals and terrorists by providing a way to purchase illegal goods and services, such as ransomware attacks or drugs, on darknet marketplaces. They can also be used to launder money, and government authorities have shut down a number of these marketplaces.
Traders react to new information in the real-time flow of financial news, which influences asset prices (Kalev et al., 2004). This is particularly true for markets with high volatility, such as cryptocurrencies. This paper analyses how the news sentiment affecting a cryptocurrency affects its returns, volatility, and liquidity. The paper uses a lexicon-based natural language processing approach to extract the news sentiment from crypto-specific news headlines. It is found that positive news sentiment increases the liquidity in a cryptocurrency by attracting uninformed herd investors who buy due to fear of missing out and pump-and-dump schemes.
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