The Network Contagion Research Institute (NCRI) has released a compelling report that sheds light on the potentially significant role played by social media bots on the platform X (formerly Twitter) in influencing the value of cryptocurrencies associated with the now-defunct FTX exchange and its sister company Alameda Research.
The study conducted by NCRI spanned from 2019 to 2023 and examined over three million posts mentioning 18 FTX-listed coins.
According to their analysis, approximately 20% of the online discussions about these cryptocurrencies were linked to bot-like accounts on X. Remarkably, this inauthentic social media activity seemed to accurately predict price changes for half of the FTX-associated coins under scrutiny.
Bots Inflate FTX Crypto Prices
The findings from NCRI research indicate that the impact of bots on the promotion of FTX-listed coins became more pronounced over time. In the lead-up to the surge in the values of the coins, the proportion of bot-generated posts steadily grew to represent around 50% of the total chatter.
These results suggest that manipulative tactics were employed to artificially boost market sentiment following the FTX listings of these coins.
Network Contagion Research Institute’s analysis called “Bot Driven Gold Rush
The study also delved into the activities surrounding recently launched crypto tokens, like the meme coin PEPE. The researchers detected abnormal patterns of account creation and identified predictive connections between bot posts and price changes, which pointed to the possibility of ongoing market manipulation through coordinated inauthentic social media activity. The coins SPELL, IMX, GALA, RNDR, and BOBA were identified as being involved in this type of behavior.
Of particular interest is the observation made by NCRI researchers that bot activity seems to surge in conjunction with official promotion by FTX. This suggests that FTX promotions could have acted as a catalyst for attracting inauthentic amplification. While the listing of coins on FTX did indeed generate substantial increases in overall chatter for each coin, the proportion of inauthentic posts in these discussions significantly increased over time.
The implications of this report are concerning, as cryptocurrencies are increasingly becoming mainstream investment vehicles. The prospect of manipulation through bots and fake social media accounts poses significant risks to investors and financial stability. The NCRI report concludes by emphasizing the necessity for greater transparency and oversight in cryptocurrency markets, which are particularly susceptible to volatility arising from orchestrated hype and deception on platforms like X.
The findings from NCRI study also raise questions about the meteoric rise and subsequent collapse of FTX amid allegations of fraud. The report suggests that the FTX empire relied heavily on inauthentic online engagement to prop up valueless assets, drawing parallels with the infamous pump-and-dump schemes that have plagued the cryptocurrency space.
As the cryptocurrency market continues to evolve, regulators and investors must be vigilant in addressing these manipulative practices. Efforts to combat the influence of bots and fraudulent social media activities should be prioritized to maintain the integrity of the market and protect investors from potential losses.
The report published by the Network Contagion Research Institute provides valuable insights into the role of social media bots on platform X in influencing the value of FTX-listed cryptocurrencies. The study highlights the need for increased transparency and oversight in the cryptocurrency market to safeguard investors and ensure its stability. As the crypto space continues to evolve, combating manipulative practices should be a shared responsibility among regulators, platforms, and users to foster a fair and sustainable market environment.
Please be aware that any investments have a high level of risk, and it’s important to conduct thorough research before making any investment decisions. The information provided here is purely for educational purposes and should not be as financial advice. Always exercise caution and make informed choices when it comes to your investments.