Twitter Bots and Cryptocurrency Pricing : The Network Contagion Research Institute (NCRI) found that Twitter bots affected cryptocurrency pricing. Alameda Research’s FTX hedge fund went insolvent due to pricing swings. Between January 1, 2019, and January 27, 2023, the National Coin Research Institute (NCRI) and New Jersey GovSTEM Scholars examined over three million tweets about 18 coins. Tweets were sent from January 1, 2019, through January 27, 2023. January 1, 2019, began this period.
A handful of alternative coins increased by 50% in one day after Elon Musk highlighted them. According to CoinMarketCap.com, token transactions almost doubled when Elon Musk posted a cat photo and a link to “PSYOP,” a coin launched by anonymous influencer Ben. Eth. Ben. eth’s currency was called “PSYOP.” Elon Musk mentioned the coin in a tweet. Musk’s tweet, which made Pepe the Frog jokes, raised PEPE’s price by 50% in 24 hours. Social media can alter coin prices for influential people like Musk.
Cryptocurrency traders are concerned about social media’s ability to sway markets after the NCRI’s findings. The study also highlighted how difficult it is for Elon Musk to stop Twitter bots from posting.
Data contradicts Elon Musk’s claim that Twitter bots have decreased since he bought the firm. Musk’s team has altered the API to make bots tougher to construct, according to NCRI’s top intelligence expert Alex Goldenberg. These modifications will likely make it more challenging for third-party researchers to conduct unbiased investigations.
Goldenberg suggested that Twitter tighten account verification, employ machine learning to discover bots and offer approved researchers special access. This would reduce bot misbehavior and increase transparency.
Before the exchange was shut down, Twitter bots led FTX token prices to rise. Social media fraud affected six FTX token prices, according to investigators. At the time, BOBA, GALA, IMX, RNDR, and SPELL were considered coins. This affected prices. After these bots promoted RNDR coins, their value skyrocketed. RNDR rose from 11% to 30% on the same day. During the same time, Twitter bots increased.
Based on this study, social media-driven cryptocurrency market activity should be closely monitored and regulated. Cryptocurrency marketplaces must stop fraud and other market manipulation to grow without compromising their reputation.