Elon Musk Tweets And Bots Boosted Price Of Altcoins Listed On FTX, Study Suggests

TOPLINE

Bot accounts and tweets from Twitter owner Elon Musk amplified the prices of FTX-listed cryptocurrencies, according to a Network Contagion Research Institute study published Wednesday, which took a close look at the sort of spam accounts that Musk recently claimed have been mostly tamed.

KEY FACTS

Researchers examined more than 3 million tweets about 18 cryptocurrencies from January 1, 2019 to January 27, 2023, a time range that includes Twitter activity before, during and slightly after Musk’s $44 billion acquisition of the platform.

Using Botometer, a service that checks the activity of Twitter accounts and gives them a score based on how likely they are to be bots, researchers found that out of a total of 182,105 unique accounts that tweeted about FTX-listed coins, 172,451 accounts were given “bot” scores.

Researchers said the bots aided in pumping the price of crypto coins traded by insiders of defunct Alameda Research, a hedge fund and sister firm of Sam Bankman-Fried’s FTX platform—a cryptocurrency exchange that went bankrupt in November.

Following promotional tweets by FTX’s official Twitter account, researchers found “activity for the coins grew increasingly inauthentic over time,” with bot-like comments growing and accounting for about half of the total chatter about the 18 coins.

The study also concluded that tweets by Musk mentioning altcoins, such as PEPE and PSYOP, created considerable price spikes for the cryptocurrencies.

Researchers cited a May 13 tweet from Musk that featured a Pepe the Frog meme that contributed to a more than 50% increase in the price of PEPE within 24 hours, with price action being fueled by “a combination of both authentic and inauthentic bot-driven activity.”

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SURPRISING FACT

The study did not directly link FTX or Alameda as being responsible for the bot accounts, but did note that FTX’s promotional tweets may have boosted bot engagement on coin chatter.

BIG NUMBER

90%. That is the percentage of scams on Twitter that Musk said in June had been eliminated from the platform, which has since been rebranded to X. However, the billionaire business owner has yet to provide data backing the claim.

CRUCIAL QUOTE

“Since Musk’s team took over Twitter last year, API changes were made to deter bot creation, possibly reducing crypto promotion and scams,” Alex Goldenberg, lead intelligence analyst for NCRI, said in an interview with CNBC, which first reported the study. “However, these changes come with trade-offs as they also hinder independent audits by third-party researchers.”

FORBES VALUATION

We estimate Musk’s net worth at $232.7 billion as of Wednesday, making him the world’s wealthiest person.

KEY BACKGROUND

Prior to his acquisition of Twitter, Musk claimed he would “defeat the spam bots or die trying!” Since then, bots on the social media platform have persisted, though it is unclear how many bots are on the site as of today. Before Musk’s acquisition of Twitter, Yale researchers found the prevalence of active bots on the site varied from 1% to 14%. “In a study of the first impeachment of Donald Trump, we found that bots were 1% of the active users, but posted 31% of the tweets,” a Yale associate professor wrote in an article about Twitter bots. Musk claimed in June at least 90% of the fake accounts littered throughout Twitter were eliminated. However, researchers found bots were still easy to find on the app, with an assistant professor of computer science at Princeton University telling the Wall Street Journal that “bad bots remain pervasive on Twitter.”