Crypto-Influencers

This study examines the investment value of advice made by “Crypto-Influencers,” or social media analysts covering crypto asset securities on Twitter. We examine the returns associated with approximately 36,000 tweets issued by 180 of the most prominent crypto social media influencers covering over 1,600 crypto securities for the two-year period spanning through December 2022. Our primary results indicate that crypto-influencers’ tweets are initially associated with positive returns. However, these tweets are followed by significant negative longer-horizon returns, suggesting that such recommendations generate minimal long-term investment value. These effects are most pronounced for tweets issued by crypto-influencers proclaiming to be professional financial analysts, especially for smaller cap crypto asset securities and for self-described experts with a high number of Twitter followers. Our evidence supports ongoing regulatory concerns regarding investors being misled by the investment recommendations made by social media influencers