Markets
The inside story of an opaque and risky market
3:00 p.m. ▪ 3 min reading ▪ by Fénelon L.
A recent study reveals the concerning impact of tweets from crypto influencers on investor returns. While the short-term effects appear positive, the losses quickly add up in the long term, raising questions about the real motivations of these personalities.
Crypto influencers drive prices higher in the short term
An academic study reveals the real impact of tweets from crypto influencers on the markets. Even if tempting gains are observed in the short term, they often mask painful losses in the long term.
To lead this analysis, three researchers sifted through 36,000 tweets posted by 180 top crypto influencers, covering more than 1,600 cryptos. The results are striking: on the day of the tweet, the average return reached 1.83%, rising to 3.86% for the smallest cryptos. The next day, the increase persisted with an average return of 1.57%.
It is the self-proclaimed “experts” and among a large audience who provoke the strongest reactions in the market. Machine learning analysis reveals that positive tweets and purchase recommendations amplify these uptrends. This enthusiasm, however, seems to be short-lived.
Behind the euphoria, losses accumulate
Unfortunately for investors, initial gains quickly give way to negative returns. After just 10 and 30 days, the average cumulative returns drop to -2.24% and -6.53%, respectively. The smallest cryptos are being hit the hardest.
These findings raise questions about potential conflicts of interest among influencers. Some may seek to artificially inflate prices in the short term before selling their positions to the detriment of their followers. The lack of transparency and regulation in the crypto market only exacerbates these risks.
“Retail investors are most likely to suffer losses, as they often lack the expertise to assess the credibility of these influencers,” points out John Doe, a crypto expert. “It is always advisable to conduct thorough research before investing.”
In summary, this study highlights the dangers of investment advice given by crypto influencers on Twitter. Despite enticing short-term gains, blindly following their recommendations appears to result in significant long-term losses. Regulators and investors would do well to be wary of these potentially deceptive practices in an otherwise largely unregulated market.
Maximize your Cointribune experience with our “Read to Earn” program! Earn points for every article you read and access exclusive rewards. Sign up now and start earning benefits.
Click here to join “Read to Earn” and turn your passion for crypto into rewards!
Fenelon L.
Passionate about Bitcoin, I like to explore the intricacies of blockchain and cryptos and I share my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.