Half of Meme Coins Had Prices Inflated by Tweeting Bots on X, Study Says

Updated: 03 August 2023

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Bots on the social media platform X may be playing a role in inflating the price of as many as half of crypto meme coins.

That’s the finding of a study by the Network Contagion Research Institute (NCRI), which analyzed more than 3 million tweets involving as many as 18 altcoins over about four years to January 2023.

It says the price of more than half of the analyzed coins, including The Sandbox, LooksRare, IMX, Gods Unchained, and Gala, was influenced by inauthentic Twitter bot activities.

Using a tool named Botometer, the study found that of 182,105 accounts that tweeted about the FTX-listed coins during the study duration, 172,451 were highly likely to be Twitter bots.

“Twitter activity played a crucial role in amplifying the value of FTX-listed cryptocurrencies,” it said. “FTX listings were immediately followed by surges sustained by Twitter activity. NCRI analysis shows that bot-like accounts comprised a substantial proportion(about 20%) of online chatter mentioning FTX-listed coins.”

It added that for half the FTX listed coins in the sample, inauthentic tweet volume showed signs of forecasting subsequent price. This suggests that bots were successfully and deliberately deployed to influence changes in FTX coin prices, it said.

Was FTX Involved in Meme Coin Price Manipulation?

The researchers also discovered a unique pattern in bot-like activities. Their analysis revealed that the volume of inauthentic tweets shot up consistently right after FTX posted promotional tweets about the listed altcoins, suggesting that this may be enhanced bot engagement on coin-related discussions on Twitter. While the study did not directly allege FTX’s involvement, it raised questions about whether FTX deliberately engaged in coordinated inauthentic activity on social media to “inflate market values artificially.'[‘

Meme Coins and Elon Musk’s Tweets

NCRI’s study also delved into the role of social media activities on the price rises of cryptocurrencies by analyzing the impact of Elon Musk’s recent tweets on the price of two meme coins named Pepe and PSYOP.

Pepe’s price shot up by more than 50% after Musk’s May 13 tweet about it. On June 24, after he retweeted a post with the caption, ‘I wake up there is another PSYOP’, its volume more than doubled over the next 24 hours.

Explaining Constitutional Amendments pic.twitter.com/oYkMPBe9Zi

— Elon Musk (@elonmusk) May 13, 2023

After taking over Twitter and rebranding it X, Musk suggested that his team has successfully eliminated a significant chunk of scamsters and bot accounts on the platform.

X could strengthen its account verification process and implement machine learning for bot detection to ensure more authenticity across the platform, NCRI said.

“As cryptocurrency grows increasingly mainstream, the potential for market manipulation through social media and inauthentic activity presents considerable risks to investors and the stability of financial markets,” it added.

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