Twitter and Market Metrics: Exploring the Role of Social Media in Cryptocurrency Investing
A mini-report by The Tie in the form of Twitter thread has strung together some very intriguing data points to build a case for social manipulation in cryptocurrency investing. Overhyped coins and appealing to humans irrational decision-making process has helped hoards of bots influence newcomers. The Tie developed their own metric called “hype to volume” which is essentially the number of tweets regarding a token/coin for every million dollars of volume, August 15, 2019.
Which Crypto Has the Most Shills?
For this study, The Tie evaluated metrics for nearly 450 cryptocurrencies and tokens, which itself is a marvelous feat. However, the insights that can be drawn from this expose the marketing nightmare in the public blockchain space.
The average ratio of tweets per every million dollars of the volume was 1.02 tweets for all 450 coins. The least hyped coins were Tether (.003), EOS (.008), Ethereum Classic (.158), Cosmos (.230), and NEO (.231).
As EOS, Ethereum Classic, and NEO are large-cap cryptos, it makes sense that they are low as they have millions and millions of dollars in volume.
The most hyped coins were TokenPay (911.1), Electroneum (678.8), Dragonchain (505.3), Telcoin (287.5), and Digibyte (153.4).
These are incredibly low cap coins, so it would be naturally adjusted upwards. However, this poses a problem as it means that they are potentially being hyped by hoard of bots who are trying to sway public sentiment on social media.
Among the top 5, XRP boasted the highest ratio of 6.66 and Bitcoin Cash had the lowest at 0.71. Bitcoin and Ethereum had 1.72 and 1.17 tweets per million in volume respectively.
Experienced cryptocurrency users and investors would be able to detect this kind of fraudulent activity in seconds, as this has been a major issue for crypto’s social media culture for a while now. The effect it has on newcomers, however, can be devastating.
Mass manipulation through social media is the easiest way to sway public opinion. After all, this wouldn’t be the first case of using social media to change public perception (2016 U.S. elections).
This metric isn’t perfect simply because there is no sound harmony between the denominate and numerator. A coin with $10 million in volume and 100 tweets (ratio of 10) would have a lower score than a coin with a volume of $2 million and 30 tweets.
It doesn’t have a direct answer and requires a comparison between the tweets and volume on an individual level as well.
Despite the minor shortcoming that can be overcome with a little extra effort, this goes a long way into making the space more legitimate and stopping new retail investors from getting fleeced by incompetent projects.