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Twitter Crypto Spam Bots Have Bigger Impact on Price Inflation Than You Think

Published August 3, 2023 5:29 PM
Omar Elorfaly
Published August 3, 2023 5:29 PM

Key Takeaways

  • Twitter bots may influence the price of your favorite token
  • Bot activity increases following tweets by major crypto players

Bots are now one of the key symptoms of an ever-evolving digital social platform. The issue was the key talking point as Elon Musk discussed his Twitter takeover (Now X). 

Upon a more thorough look into social media bots, specifically in the crypto sphere, it is evident that bot activity on platforms such as Twitter exceeds activity by organic users many times over.

The phenomenon proves rather dangerous as word-of-mouth and news headlines heavily influence the crypto market.

A study by Network Contagion Research Institute  analyzed 3 million tweets posted from the start of 2019, to the start of this year. The findings truly highlight the extent of influence these bots have on token prices. 

Bot Study

Contagion’s research mainly focused on tweets related to FTX activity. According to the study, “Twitter activity played a crucial role in amplifying the value of FTX listed cryptocurrencies: FTX listings were immediately followed by surges sustained Twitter activity.”

“After promotion by FTX, activity for the coins grew increasingly inauthentic overtime: The proportion of inauthentic, bot-like comments steadily grew to approximately 50% of the total chatter.”

The paper describes the atmosphere on Twitter when FTX was coming up in the market, growing to be the most promising crypto institution.

“One aspect of the FTX scandal that has not been closely examined is the role that inauthentic social media might have played in elevating the value of FTX, its currencies, and key activities.”

“Though the notion that social media played an outsized role in the scandal is commonly trumpeted in popular media3, quantitative examination of this subject is lacking.”

“Similarly unresolved is the specific role that bot-like accounts, or accounts engaged in inauthentic coordinated activity on social media platforms may have played in amplifying engagement around FTX listed cryptocurrencies,” The report read.

“NCRI began to investigate the role of social media in the FTX scandal by performing a scaled analysis on Twitter and examining over 3,000,000 tweets from January 1, 2019 to January 27, 2023.

NCRI specifically collected mentions of 18 coins that had both been publicly listed on FTX exchange while also being directly promoted in the form of an advertisement tweet by FTX’s Twitter handle (@FTX_Official).”

The research institute kicked off its study by gathering pricing and trading volume data on 6 FTX listed and promoted coins. Next, NCRI gathered all tweets concerning said coins, including mentions, tweets by deployers, and any tweet that held one of the coins’ ticker symbols. Researchers ended up finding a staggering amount of tweets, reaching 970560 tweets.

Inauthentic tweets
NCRI examined over three million tweets, highlighting the influence of bot tweets

Correlation Or Causation?

“To better parse this question, NCRI applied Granger causality analysis, a test which statistically establishes relationship directionality, over all coins in the data sample. NCRI tested directionality between these factors: Twitter chatter surrounding each of these coins, the coin price, the coin transaction volume, and the coin trading volume.”

The main purpose of the Granger causality analysis is to highlight the patterns in the data. The test showed that organic tweets more-or-less followed the general direction of news regarding the respective coins. However, “ inauthentic activity followed changes in coin prices, suggesting that inauthentic networks were responding to price changes as well as instigating them.”

The investigation focused on six specific altcoins: $BOBA, $GALA, $IMX, $RNDR, $SAND, and $SPELL.

Granger test on six altcoins
NCRI focused on six altcoins during its Granger test

Elon Didn’t Kill The Bots

During the bid wars for the Twitter takeover, Elon repeatedly tweeted about the bot problem on Twitter, claiming that bots are influencing politics and economics through Twitter.

The tech billionaire promised a bot purge when he takes over the platform. He also started promoting paid verifications that would eliminate the bot problem once and for all.

If NCRI’s research shows anything, it’s that bot activity in the crypto space, in fact, increased over time, even after Musk took over the platform’s helm.

“Contrary to assertions that bot activity on Twitter had diminished since his takeover, NCRI’s analysis tells a different story. A considerable presence of bots14 was observed in relation to tweets about $PEPE and $PSYOP.”


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