A new report by the Network Contagion Research Institute (NCRI) reveals that crypto Twitter bots are playing an increasingly important role in driving buzz around volatile, high-risk cryptocurrencies – including altcoins boosted by Tesla CEO Elon Musk.
The study, conducted by a group of researchers, looked into 3 million tweets on 18 crypto tokens posted by the crypto Twitter community (today, the social network is known as X) from January 1ft, 2019, to January 27, 2023.
The study found that Musk’s references to altcoins, which were handled by Alameda Research, FTX’s sister organisation, caused the value to rise up to 50% within one day.
For example, the Pepe the Frog meme posted by Musk shot up the price of the popular altcoin PEPECOIN by over 50% in a 24-hour period in May 2023. The Pepe the Frog meme is an iconic internet meme created by cartoonist Matt Furie in 2005.
FTX Exchange, founded by Bankman-Fried in 2018, went bankrupt in November of 2022 due to a number of factors, such as mismanagement, overleveraging, and the resulting liquidity crunch. Alameda Research, founded by Bankman-Fried as well, was a sister company of FTX.
Elon Musk has repeatedly denied having any influence on the prices of cryptocurrencies, yet research unanimously demonstrates that his influence on the crypto Twitter community is able to wield an incredibly powerful sway over the crypto markets.
The Lead Intelligence Analyst for NCRI, Alex Goldenberg, stated to CNBC that the API changes implemented by Musk’s team since they took over Twitter had a dual effect. On the one hand, it has helped to reduce cryptocurrency promotion and scams. Still, on the other hand, it has also made it more difficult for independent auditors and third-party researchers to carry out their investigations.