The NCRI has concluded that social media activity was not the only factor contributing to the coins’ popularity, but potentially a strategic ploy to influence market sentiment.
On Wednesday, researchers from the Network Contagion Research Institute (NCRI) released the findings of their study that tracked the correlation between the activity on social media and prices of coins listed on the FTX crypto exchange before its collapse. The study has revealed that Twitter bots and tweets posted by Elon Musk played a crucial role in boosting the prices of cryptocurrencies and causing prices of certain altcoins to spike by as much as 50% within a single day.
To see the correlation between Twitter activity and coins’ performance, NCRI examined more than 3,000,000 tweets posted from January 1, 2019, to January 27, 2023. NCRI specifically collected mentions of 18 coins that had been not only publicly listed on the FTX exchange but also were directly promoted in the form of an advertisement tweet by FTX’s Twitter handle (@FTX_Official).
Next, the Research Institute tracked the price data on those 18 coins and checked their trading volume as well as the number of transactions in daily intervals.
The analysis has shown that out of a total of 182,105 unique accounts that tweeted about the coins, as many as 172,451 accounts received “bot” scores. Besides, 11,215 accounts were inauthentic or bot. The total number of bot accounts made up 6.5% of the total number of accounts investigated. Notably, these accounts contributed to about 20% of all tweets in the sample.
When buying Twitter, Elon Musk promised to ensure a decrease in bot activity. But seems that it has turned out to be the opposite. A significant presence of bots was noticed in tweets related to Pepecoin (PEPE), PSYOP, Boba Network (BOBA), Gala Games (GALA), and Render Token (RNDR).
The study has also given examples of cases where Elon Musk’s tweets provoked a surge in the prices of the coins mentioned by the billionaire.
For instance, the tweet below features Pepe the Frog meme. Following the tweet, Pepecoin saw a more than 50% increase within 24 hours.
Explaining Constitutional Amendments pic.twitter.com/oYkMPBe9Zi
— Elon Musk (@elonmusk) May 13, 2023
The following tweet from June 24, 2023, caused a spike in the trading volume of the Psyop coin launched by crypto influencer ben.eth:
Here we go again pic.twitter.com/7K9UW9LbJz
— Elon Musk (@elonmusk) June 25, 2023
By July 17, 2023, PSYOP had reached a market capitalization of $1 billion.
According to the NCRI team, FTX founder Sam Bankman-Fried was well aware of Twitter’s influence on the crypto markets. Currently, Sam Bankman-Fried is waiting for the trial set to take place in October.
The NCRI has concluded that social media activity was not the only factor contributing to the coins’ popularity, but potentially a strategic ploy to influence market sentiment. However, manipulation through social media and inauthentic activity poses significant risks to investors and the stability of financial markets. Therefore, NCRI is calling on regulators for proper guidelines and transparency in the financial market.
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