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How Does Social Media Influence Crypto?

Introduction

Cryptocurrency is a digital asset designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Social media is a technological platform that enables users to interact socially and share information such as personal updates, photos, and videos. It is a type of web service. Social media is playing a significant role into crypto and this article with explain how. 

Crypto and social media

There is a relationship with two sides, as you can see. As cryptocurrency is gaining popularity, it gains the interest of the people. People start seeing it as a valuable investment opportunity and as a result, more and more people start visiting websites and blogs related to it. This leads to the discussion of cryptocurrency on social media.

According to a research paper published in the Journal of Monetary Economics, social media may influence cryptocurrency. Social media platforms such as Facebook and Twitter have made cryptocurrencies popular and accessible. The research paper shows that the price of cryptocurrencies is highly responsive to the number of Google searches for them and their “social media footprint,” or “indexing,” on Facebook and Twitter. The researchers conclude that the public interest in cryptocurrencies is driven by an increase in media coverage and social media activity such as search queries and social media indexing. The study also shows that the price of cryptocurrencies is highly sensitive to negative news in traditional media and negative search queries related to cryptocurrencies in Google.

How does social media influence crypto?

Cryptocurrencies have been widely discussed on social media platforms such as Twitter and Reddit. In fact, a cryptocurrency-related tweet from Twitter has been found to have a price impact of more than $200 million. Social media also influences cryptocurrency prices. For instance, a recent study by social media research firm Cision found that the price of Bitcoin rose by more than 7% in the 24 hours following a tweet from a leading exchange. 

Social media has become a major influence in cryptocurrency. When it comes to social media, it doesn’t take much to spread the word about a new project. Crypto influencers are crucial to success. They are able to create hype for a project, which triggers the curiosity of the community, which continues to support the project. If an influencer is talking about a project, it is likely that they are holding it, which is a big advantage for the community. The fact that they are already holding the coin is enough for the average investor to join in. 

Social media platforms are also used for advertising purposes. To gain exposure, projects advertise on platforms like Facebook, Twitter, and Instagram. It is not uncommon for projects to buy ads on these platforms. Social media is also used for posting tutorials about how to use the project’s wallet, the underlying technology, or how to purchase the project’s cryptocurrency. The more information that is available, the better. 

Social media is also used for discussing the latest crypto news. This news can be either negative or positive. For example, if a project is planning an airdrop, social media would be used for advertising the fact that they will be giving away free tokens. This news would then spread virally within the crypto community, creating hype for the project. On the other hand, if there is bad news, it can also spread like wildfire. For example, if the US government is targeting certain projects, the community will know about it quickly. This can cause panic selling. 

Social media is also used for signaling. This is when a number of influential people talk about a project. For example, if a number of influencers are talking about a project, but there is no news, it is a good indicator that something is happening. The hype surrounding a project can influence its price. If a project is hitting all the right notes on social media, it is a good indication that people are buying into the project. If a project is getting a lot of attention on social media, its price will likely rise.

Are there downsides to social media in the crypto world?

Social media can be a double edged sword. Projects can easily get a lot of attention from investors who have little to no knowledge about the project. They will buy into the hype and quickly sell their tokens when the price spikes, which can create a selloff. This is known as a pump and dump. Social media can also be used to spread rumors. If a project is being accused of being a scam, it can have a negative impact on the price. Cryptocurrency is a highly speculative market. Investors, who have no idea what they are doing, can be influenced by a tweet or a Facebook post. If a project is being negatively discussed on social media, the price will likely drop. 

FUD and Crypto

The use of social media to spread FUD (fear, uncertainty and doubt) about certain cryptocurrencies has become a common occurrence. As for how this happens, you’ll typically find that someone who holds/shares a certain cryptocurrency will post about the cryptocurrency on their social media platform. Usually, this will be positive news which will cause the price of the cryptocurrency to increase. However, sometimes the news (which may not be true) is spread with the intention of causing the price of the cryptocurrency to fall. For example, if someone were to post about a major exchange announcing that it will be delisting a cryptocurrency, that news will spread like wildfire and will cause the price of the cryptocurrency to fall. This is called FUD and it is a common way that social media is used to manipulate cryptocurrency prices. 

Another way that social media is used to manipulate cryptocurrency prices is by making negative comments about a cryptocurrency. When someone is making negative comments about a cryptocurrency, there is a possibility that such comments will cause the price of the cryptocurrency to fall. This is because such negative comments will cause people to lose confidence in the cryptocurrency. For example, if someone were to post about a cryptocurrency being a scam, this would cause people to lose confidence in the cryptocurrency and that would cause the price of the cryptocurrency to fall. Obviously, this would have to gain a significant amount of traction to have a real impact on the cryptocurrency. This is why it is important to be careful about what you read on social media. You should be careful about what you share and what you listen to. It is important to be careful about what you post on social media as well. What you post online has the potential to impact the price of cryptocurrencies. You can use your social media accounts to manipulate cryptocurrency prices. For example, if you have a social media account with a lot of followers, you can post about a cryptocurrency and that can cause the price of the cryptocurrency to move up. Another thing that you can do is to buy a lot of a cryptocurrency and then post about it on your social media accounts. That post will cause the price of the cryptocurrency to go up. As you can see, social media can be used to manipulate cryptocurrency prices. 

Conclusion

Social media is a very powerful tool. It is a powerful tool because it helps people communicate with each other. Social media can help people communicate with each other from all over the world. Social media can also help people offer feedback on a cryptocurrency. This is a good thing as it will help people to figure out the value of a cryptocurrency. However, social media can be used to manipulate cryptocurrency prices as well. As we have seen above, social media can be used to spread positive and negative news about cryptocurrencies. This can cause the price of cryptocurrencies to rise or fall. Social media can also help to create positive or negative hype about cryptocurrencies.

That is why at Invezo, we track social media momentum of stocks and cryptocurrencies. We also give the ability to see the sentiment of stocks and cryptos at that particular time. This enables investors to gauge and hedge risk when investing.