Crypto-Influencers

60 Pages Posted: 19 Apr 2023 Last revised: 17 Feb 2024

See all articles by Kenneth J. Merkley

Kenneth J. Merkley

Indiana University - Kelley School of Business - Department of Accounting

Joseph Pacelli

Harvard University - Business School (HBS)

Mark Piorkowski

Indiana University Bloomington - Kelley School of Business

Brian Williams

Texas A&M University

Date Written: February 14, 2024

Abstract

This study examines the investment value of information provided by “Crypto-Influencers,” or social media influencers 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 they generate minimal long-term investment value. These effects are most pronounced for tweets issued by crypto-influencers proclaiming to be crypto experts, for smaller cap crypto asset securities and for self-described experts with a high number of Twitter followers. In additional analysis, we utilize machine-learning methods to classify tweets, and find that this pattern of results is stronger when the tweets have a more positive sentiment or are related to ‘buy’ recommendations. Our evidence supports ongoing regulatory concerns regarding investors being misled by social media influencers.

Keywords: Cryptocurrency, Information Intermediaries, Social Media

JEL Classification: G11, G14, M49

Suggested Citation

Merkley, Kenneth J. and Pacelli, Joseph and Piorkowski, Mark and Williams, Brian, Crypto-Influencers (February 14, 2024). Available at SSRN: https://ssrn.com/abstract=4412017 or http://dx.doi.org/10.2139/ssrn.4412017

Kenneth J. Merkley (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Joseph Pacelli

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Mark Piorkowski

Indiana University Bloomington - Kelley School of Business ( email )

1309 E 10th Street, Hodge Hall 4100
Bloomington, IN 47405
United States

Brian Williams

Texas A&M University ( email )

Langford Building A
798 Ross St.
College Station, TX 77843-3137
United States

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