Twitter Price Actions
A recent study by the Network Contagion Research Institute (NCRI) has exposed the influence of Twitter bots on cryptocurrency prices. The research, covering over 3 million tweets from 2019 to 2023, highlighted how certain altcoins were pumped up in value, including coins traded by insiders at the now-collapsed Alameda Research hedge fund. Elon Musk’s tweets were found to have a significant impact on crypto prices, causing spikes of up to 50% in just one day. For instance, a retweet featuring a kitten led to a near-doubling in volume for a specific altcoin called “PSYOP,” while a tweet featuring Pepe the Frog memes led to over 50% price increase in the PEPE altcoin.
The study raised concerns about market manipulation in the broader crypto markets through social media-driven activity and shed light on the FTX exchange’s situation before its collapse. Inauthentic social media activity on Twitter, likely driven by bots, significantly influenced the prices of FTX-listed tokens. FTX founder, Sam Bankman-Fried, had previously acknowledged Twitter’s power in driving crypto markets, with a simple investment of $200 million collectively shaping market sentiment and token prices. As the crypto landscape faces scrutiny, Bankman-Fried now faces federal charges of securities and wire fraud. The study emphasises the importance of monitoring social media and AI-driven algorithms to ensure transparency and mitigate potential risks in the crypto market. What do you think about the tight connections between Twitter and price-action on different crypto-currencies? Do you think this theme from 2020 will continue? Or is this just a blip in history and a byproduct of crypto’s strange nature.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.