Studies indicate a significant correlation between a crypto’s social media engagement and its profitability.
An alarming revelation from the study of cryptos and their social media engagement is the influence of Twitter bots (~15% of active users), which can inflate the perceived popularity of scams and the money that the masses invest in them.
These bots generate an illusion of widespread enthusiasm, a familiar tactic in pump-and-dump schemes and used in absolutely every market in the world.
Krypto saw impressive returns of up to 49% after two months, but then reached negative returns.
Krypto’s engagement coefficient was almost an order of magnitude higher than that of other tokens, suggesting possible bot interference.
The study also analyzed the prevalence of bot activity in discussions, using a tool called Botometer.
This algorithm calculates the probability that a Twitter account is a bot. The highest average bot probabilities were associated with lower-performing cryptocurrencies because developing a genuine, real community takes infinitely more effort.
Latte, a DeFi cryptocurrency, had the highest average bot probability and its price fell 95% in three months:
