The average accumulated return on positions opened based on signals from crypto-influencers in X after 10 and 30 days was -2.24% and -6.53%, respectively. These results were obtained by scientists from three universities.
The profitability of transactions on the first and second days after the recommendations amounted to 1.83% and 1.57%, for tokens with small capitalization a day later – 3.86%.
In other words, expert tweets cause short-term price increases. In the long term, the effect becomes negative.
The influence is most noticeable for posts published by those who position themselves as experts, as well as among influencers with the largest number of followers.
Below are statistics of the top 25 influencers in the industry by number of mentions and tracked tokens.
Top 25 Crypto-Influencers by Number of Mentions pic.twitter.com/6c9lEucdZj
— Wu Blockchain (@WuBlockchain) May 16, 2024
This pattern is stronger when posts have a more positive tone or are associated with “buy” recommendations.
The researchers concluded that such advice is of low value.
The data may support regulators' concerns that crypto-influencers may be misleading investors, experts added.
The team was formed by representatives of Indiana University, Harvard Business School and Texas A&M University.
The sample was based on 36,000 tweets published by 180 of the most prominent crypto influencers. The study covered recommendations for 1,600 assets over a two-year period to December 2022.
Scientists used machine learning methods to classify tweets.
The research methodology and data analysis provide insight into how social media influencers can influence investment decisions, the paper said.
The work highlights the need to continually study the influence of social networks on the actions of market participants.
On February 24, crypto blogger Ben Armstrong, known from the YouTube channel Bitboy Crypto, fought against a developer under the nickname More Light. The event led to the rise of two meme tokens.
Previously founded by cryptocurrency influencer Irene Zhao, the social Web3 network So-Col (Social Collectables) raised $4.5 million.
Source: Cryptocurrency
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