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Losses incurred due to following crypto influencers’ recommendations

Discoveries from crypto experts lead to surprising insights, researchers from top universities reveal.

Renowned Chinese reporter Colin Wu highlights that following advice from crypto influencers resulted in a decrease of 2.24% and 6.53% in overall returns after 10 and 30 days, respectively.

Data from Indiana University, Harvard Business School, and Texas A&M University support these findings. An extensive analysis of 36,000 tweets from 180 influential figures in the crypto sphere spanned over two years until December 2022, providing insight into recommendations for 1,600 assets.

For tokens with smaller market capitalization, gains of 1.83% and 1.57% were observed within the first and second days post-recommendation, with a substantial increase of 3.86% the following day.

In essence, tweets from experts initially boost prices but lead to negative outcomes in the long run.

The impact is most significant for recommendations coming from individuals portraying themselves as authorities, particularly for influencers with a large follower base. Researchers also note that this data supports concerns raised by regulators regarding potential misinformation by crypto influencers.

In an interesting study conducted in February, it was established that emojis conveying positive feelings on social media could predict upward trends in the cryptocurrency market. By strategically trading Bitcoin (BTC) based on emoji sentiments, researchers consistently outperformed standard market performance.


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