Beware of Crypto Influencer Advice: A Closer Look

As cryptocurrency becomes more popular, so do crypto influencers sharing investment tips. But are their recommendations worth following? According to a new study, not really. While their tweets might grab attention and initially boost crypto prices, the hype doesn't last long. Prices often drop soon after, suggesting that these influencers might be involved in pump and dump schemes. This is especially true for so-called experts with lots of followers. The researchers looked at over 36, 000 tweets from 180 prominent crypto influencers about more than 1, 600 cryptocurrencies over two years. They found that while prices initially jumped—about 1. 83% in a day, and 1. 57% in two days—they started dropping by the fifth day. By the tenth day, the average return was -2. 24%, and by the thirtieth day, it was -6. 53%. That's a big loss! Experts with more followers had even worse results. Investors who bought smaller, less-known cryptos based on influencer tweets and held onto them for 30 days lost around 7. 9%, or 62. 8% annualized. It's like chasing a trend that quickly fades away. The study also found that positive tweets and buy recommendations had even more negative outcomes. It seems influencers often just chase trends to gain followers, not thinking about the crypto's future performance. So, be careful before you follow crypto influencer advice!