In a new blog post, the European Central Bank (ECB) examines how the Reddit Retail Investor Sentiment Indicator (R-RISI) captures shifts in retail investor sentiment and their relationship with market movements. Changes in the indicator are associated with market returns the following day, particularly during downturns. It provides more timely and frequent information than investor surveys, offering insight into a more speculative segment of retail investors.
The indicator uses OpenAI’s ChatGPT 5.1 to classify Reddit posts by sentiment, topic and asset. Its readings show whether sentiment is unusually positive or negative relative to the preceding year, with breakdowns revealing which narratives drive changes. Macroeconomic discussions were an important negative contributor during the COVID-19 market shock, while tariff discussions sharply depressed sentiment during the April 2025 turmoil. Separate topic indicators also capture different reaction times: geopolitical sentiment weakened immediately after Russia’s invasion of Ukraine, while macroeconomic sentiment deteriorated later as the implications for energy prices and inflation became clearer.
Indicators for artificial intelligence stocks and Bitcoin broadly correlate with market prices, although the relationships vary. Sentiment concerning the Magnificent Seven technology companies moves more closely with prices during market stress and is more volatile than prices. Bitcoin sentiment diverges from prices more often and fluctuates more sharply than the measure for artificial intelligence stocks.