Drama and manipulation aren't new to the crypto market, to say the very least.
Over the last decade or so of the existence of cryptocurrencies' existence, there has been an endless stream of scandals, scams and fresh drama to keep the industry entertained.
However, if you have been an active participant in the market over the last few years, you would agree that one of the most influential figures in the crypto industry is non-other than the Tesla (and now Twitter or X) CEO:
Elon Musk.
Even before buying Twitter for more than $40 billion earlier this year, Musk has been at the forefront of the rise and fall of many a cryptocurrency.
He was right in the middle of the action when the 2021 bear market first hit.
There was even a time when cryptocurrencies (dogecoin and a few others) doubled in price after a mere tweet from this one man.
Yes, Twitter, Musk and cryptocurrencies have had a long and complicated history.
However, a recently dredged-up link between Twitter, Musk and FTX's altcoins has muddied up the waters some more, and it is the crypto industry's hottest piece of gossip at the moment.
According to a new study by the Network Contagion Research Institute [NCRI], Twitter bots may have played a vital role in moving the price of altcoins over the years.
The research, which ran from January 1, 2019, to January 27, 2023, also highlights how this might have helped FTX and its sister company's altcoins.
From January 2019 until January 2023, NCRI looked through almost 3 million tweets on Twitter.
According to the researchers, most of the 172,451 accounts that discussed FTX-listed coins out of the 182,105 unique accounts that discussed them were marked as possible bots.
This alone shows that bot-like accounts were responsible for roughly 20% of the online conversations surrounding coins listed on the FTX according to a tool called the Botometer.
The Botometer is a tool that analyzes Twitter accounts' activity and gives them a score that indicates how likely it is that they are bots.
According to NCRI's analysis, these bots' Twitter activity significantly increased the value of some of the tokens listed on FTX.
Six small-cap tokens on the exchange—BOBA, GALA, IMX, RNDR, and SPELL—were shown to be especially vulnerable to price manipulation, through dishonest social media interaction, according to the researchers' observations.
The research findings also demonstrated how effective "inauthentic chatter" was, when influencing the values of these FTX coins.
According to NCRI, close inspection of bot activity was closely correlated with strong price changes on $RNDR.
For other coins like $SAND and $BOBA, however, bot activity came after the changes in coin prices. This, NCRI notes, means that these bots were tweeting in response to price changes, as well as causing them.
The study conducted by NCRI also showed how powerful (and destructive) Elon Musk's tweets are.
The study shows that Musk's tweets have the power to cause some cryptocurrency values to rise by as much as 50% in a single day.
The study also shows the effects of market manipulation, especially when it is fuelled by social media.
NCRI's research shows that Musk's tweets in 2023 were connected to notable gains in the prices of two cryptocurrencies, PSYOP and PEPE, in particular.
These were not haphazard tweets, NCRI noted; rather, they were thoughtfully composed tweets that featured one of the most loved forms of internet entertainment:
Memes.
Recall that PEPE even hit an amazing 1.7 billion dollar market cap in less than a few weeks. If you don't think that's amazing, Dogecoin (another memecoin with insane gain potential) took nearly 4 years to reach a $1 billion market cap.
NCRI notes that Musk's PEPE tweet (also featuring a meme) on May 13, 2023, caused a 50% price increase in PEPE in less than 24 hours.
Elon Musk had always expressed concerns about the millions (or even billions) of bots on Twitter, before buying the social media network. And since taking charge, Musk has claimed that there has been a massive decline in bot activity.
However, there has been almost no hard evidence to support this assertion.
The discovery of this bot activity shows a deep-rooted problem and shows that whatever caused the FTX saga isn't truly gone.
This research draws some attention to the relationship between Twitter bots and FTX's altcoins and adds a whole new perspective to the story.
But according to NCRI's Lead Intelligence Analyst, Alex Goldenberg, Twitter has been altering its API to make bot creation less common. This might lead to a drop in fraud. However, it poses another issue with independent audits on the platform, by independent researchers.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.