• New research finds that Twitter bot accounts may have lifted the prices of digital assets listed on FTX and traded by its hedge fund arm, Alameda Research.
• The study examined more than three million tweets between January 1, 2019, to January 27, 2023, that mention 18 cryptocurrencies once publicly listed on the now-defunct FTX exchange.
• NCRI researchers suggest that “inauthentic, bot-like comments” about the 18 tokens increased over time after FTX promoted the digital assets.
Study Finds Evidence of Social Media Bot Manipulation in Crypto Market
A recent study conducted by Network Contagion Research Institute (NCRI) has found evidence of social media bots being used to influence crypto markets and prices. The study analyzed more than 3 million tweets related to 18 cryptocurrencies which were once listed on the now-defunct exchange FTX.
FTX’s Awareness of Twitter’s Influence
The study highlights how Sam Bankman-Fried, founder and former head of FTX was well aware of Twitter’s large influence on crypto prices. He stated: “In the world that we’re in, if you do this, everyone’s gonna be like, Ooh, a box token. Maybe it’s cool. If you buy a box token,‘ you know, that’s gonna appear on Twitter and it will have a $20 million market cap.“ This suggests an acute awareness of Twitter’s power to shape market sentiment in regards to cryptocurrency values and price movements.
Questions Arise Over Possible Manipulation
This raises questions over whether or not FTX or Alameda had engaged in any coordinated inauthentic activity on social media to artificially inflate market values. NCRI’s findings showed that it wasn’t just price variations that influenced tweet volumes but rather tweet volumes had an effect on token prices as well.
Evidence Of Bot Activity Increase After Promotion By FTX
NCRI researchers discovered evidence suggesting bot activity increased following promotion by FTX for certain tokens including Render (RNDR), The Sandbox (SAND), Immutable (IMX) and Gala (GALA). This indicates promotion by FTX may have been used as a catalytic factor for attracting these bots amplifying market sentiment around certain tokens with their posts/comments/tweets etc..
Conclusion
This research suggests there may be cases where social media bots are being used to manipulate markets which is something all investors need to be aware off when trading and investing in the crypto space going forward. It is also important to take into account sources when researching any token before making decisions regarding investments as some sources could be biased or sponsored by particular projects for promoting tokens rather than providing valid information for investors looking make informed decisions about their capital investments into digital assets/cryptocurrencies