As an experienced financial analyst, I have seen firsthand how influential social media can be on financial markets, including cryptocurrencies. However, this new study conducted by researchers from Indiana University, Harvard Business School, and Texas A&M University sheds light on the potential risks of following crypto influencers’ recommendations. Based on their findings, I believe that relying solely on such advice for investment decisions could lead to significant losses in the long term.
Recommendations from crypto influencers lead to losses, scientists from three universities said.
As a data analyst examining the performance of cryptocurrency trading signals provided by influencers in X, according to Chinese journalist Colin Wu’s findings, the average returns on positions opened 10 and 30 days after receiving these signals saw a decrease of approximately 2.24% and 6.53%, respectively.
Experts from Indiana University, Harvard Business School, and Texas A&M University have reported the following findings. The research was derived from an analysis of 36,000 tweets posted by 180 prominent figures in the crypto industry between 2020 and December 2022. The study encompassed suggestions for a total of 1,600 different assets over this time frame.
Top 25 Crypto-Influencers by Number of Mentions
— Wu Blockchain (@WuBlockchain) May 16, 2024
Transactions made on the first and second days following the recommendations generated profits of 1.83% and 1.57% respectively for tokens with smaller market caps. This equates to an overall gain of approximately 3.86% within a day.
Expert tweets can lead to temporary price hikes, yet their impact turns unfavorable over the long haul.
The impact is particularly significant for content created by recognized experts and social media personalities with a substantial following. According to experts, this data could validate regulatory worries about the potential for crypto-influencers to deceive investors.
In February, a study conducted by researchers revealed that the use of emojis conveying positive emotions on social media platforms can serve as an indicator for potential increases in cryptocurrency markets, particularly Bitcoin (BTC). By strategically purchasing Bitcoin when such positive sentiment was identified through emojis and selling it the following day, these researchers were able to consistently generate profits that surpassed typical market trends.
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2024-05-16 20:47