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Fundamental role of Twitter
Crypto Twitter is arguably the most important news and information platform in the blockchain industry. It plays a similar role to the famous Bloomberg Terminal in the traditional financial markets, with the difference that Crypto Twitter (or just CT) is free and has many millions of users, not just hundreds of thousands.
In some regions, other platforms compete with CT for influence: for example, in the US Reddit is also very popular, while in China (where Twitter is blocked) people use Weibo. However, CT is the only truly global crypto platform.
The role of CT as a real-time source of information was illustrated by the FTX collapse. It started with a single tweet by the Binance CEO Changpeng Zhao (CZ), saying that Binance would liquidate all of its FTX token holdings following some ‘revelations’. A massive FTX sell-off ensued, resulting in a price crash and, eventually, the bankruptcy of Sam Bankman-Fried’s exchange. If it wasn’t for CZ’s tweet (notably posted on a Sunday, when volatility is higher), things could have gone differently.
Apart from spreading news (and fake news), CT is a crucial source of information about crypto investment opportunities. New projects often start a Twitter account before launching a website, and information about IDOs, airdrops, new feature releases, etc. appears on Twitter before it’s published anywhere else. The most common sequence is for a user to 1. First read about a coin in a post by a CT influencer; 2. Join the project’s Twitter; 3. Join the project’s Discord or Telegram and check the website – all using the links in its Twitter bio; 4. Look for more information about the project or the narrative in the media. In other words, successful community-building starts with CT.
The role of crypto influencers as a source of information can’t be overstated, either. A single tweet by a large account can cause a spike in the sales of a microcap token (i.e. an asset with a market capitalization below $50 million). For instance, the success of the AI narrative in early 2022, which caused rallies in smaller AI tokens like MAN and DBC was driven in part by the support of CT influencers.
By themselves, users would have hardly found out about these tokens, and the amount of information published in the traditional crypto media was very limited (and usually followed the coverage by influencers anyway).
Another famous example of CT’s influence on coin performance is the DOGE price rally in early 2021 following supportive tweets by Elon Musk. In fact, a recent study found that Twitter activity has a significant statistical impact on the economic attributes of community-driven cryptocurrencies like Dogecoin. The study suggests that a trading bot can be built based on CT activity – and while PEPEGEM AI isn’t a trading bot but rather a data-mining AI, we follow the same concept of studying Twitter to provide clues on future crypto price dynamics.
On the other hand (as noted by the same study), the level of Twitter activity around a coin is, in turn, impacted by the activity of whales (large investors and stakeholders). This leads us to the main problem: using Twitter to decide which projects to invest in and when is far from straightforward.