A new study by Network Contagion Research Institute(NCRI) studied 3 million tweets about 18 different cryptocurrencies from January 2019 to January 2023, highlighting the influence of Twitter bots and Elon Musk’s comments on cryptocurrency prices.
Musk’s tweets naming specific alternative currencies led to noticeable price increases, prompting questions about possible social media market manipulation. The study also demonstrates how fraudulent Twitter activity influenced the increase in token prices on the now-defunct FTX cryptocurrency exchange.
When Elon Musk highlights specific altcoins in his tweets, the market for cryptocurrencies experiences noticeable price increases of up to 50% in a single day. One case was a tweet with a cat sent by an unnamed Twitter influencer, which caused the trading volume for the altcoin PSYOP to nearly double. Similar to this, Musk’s tweet featuring Pepe the Frog memes caused the price of the alternative coin PEPE to increase by almost 50%. The study highlights concerns about market manipulation made feasible by social media and emphasizes the difficulties in controlling bot activity.
As per NCRI, inauthentic tweet volume was found to forecast the prices of half of the FTX listed coins in the study, hinting at the successful and deliberate deployment of inauthentic networks aimed at influencing FTX coin prices, leading to suspicions of FTX or Alameda potentially coordinating inauthentic social media activity to artificially boost market values.
The researchers of the study noted that this phenomenon could extend to impact stocks and other securities as well, citing the social media frenzy that occurred in 2022 with “meme stocks” like Gamestop and AMC.
