Crypto-Spouting Twitter Bots Responsible for Inflating Altcoin Prices
A recent study conducted by the Network Contagion Research Institute (NCRI) has shed new light on the role of crypto-spouting Twitter bots in artificially inflating the prices of altcoins.
The study, published on August 2, utilized a sample of various FTX-listed cryptocurrencies and analyzed over 3 million tweets posted between January 1, 2019, and January 27, 2023, involving 18 altcoins.
The findings of the study revealed that Twitter bot activity played a crucial role in amplifying the value of these cryptocurrencies.
Notably, altcoins like The Sandbox (SAND), Gala (GALA), Gods Unchained (GODS), and LooksRare (LOOKS) showed signs of price influence due to tweet bot activity.
Almost half of the coins examined displayed an impact on prices as a result of this inauthentic activity.
Moreover, the study indicated that the volume of inauthentic tweets increased significantly after FTX posted about the token on social media.
This raised concerns about the potential involvement of FTX or Alameda Research in coordinating the bot activity to artificially inflate market values.
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The researchers also investigated the impact of Twitter bot activity and Elon Musk’s crypto-related tweets on two memecoins, Pepe (PEPE) and PSYOP.
The study revealed a surge in newly created bot accounts just before the launch of PEPE, all of which subsequently tweeted about one of the two coins.
Additionally, both Pepe Coin and PSYOP were bolstered by two of Musk’s tweets that seemingly endorsed each token.
For instance, Musk’s Pepe meme tweet caused the token’s price to surge by over 50% within 24 hours.
The study raises questions about the potential ramifications of coordinated inauthentic activity on social media, not only in the cryptocurrency market but also in stocks and other securities.
The researchers cited the social media frenzy in 2022 surrounding so-called “meme stocks” like GameStop and AMC as an example of how such manipulative tactics could affect traditional financial assets.
In conclusion, the NCRI study has highlighted the significant impact of crypto-spouting Twitter bots on the prices of altcoins, suggesting that inauthentic networks deliberately deployed these bots to influence market values.
As the cryptocurrency market continues to evolve, it becomes increasingly important for regulators and platforms to be vigilant against such manipulative practices to maintain market integrity and protect investors.
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