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Twitter Promotion and Investor Behavior in Crypto Pump-and-Dumps

Article arXiv papers · Author: David Ardia et al.
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Summary

The document examines how Twitter promotion relates to cryptocurrency pump-and-dump events. It analyzes abnormal returns, trading volume, and tweet activity to assess how promotion draws attention to these schemes and how market behavior changes around the event. The summary reports abnormal return effects before the pump-and-dump, suggesting that price moves can begin ahead of the event itself.

It also compares participants by their reliance on Twitter information. Those investors are reported to sell later during the post-dump decline and to incur larger losses than other participants. This offers a caution about treating promotional social media as timely trading information, especially when liquidity and prices can change quickly after a dump. The document does not describe the dataset, event definition, statistical methods, or whether the observed differences establish causation, so the findings should be read as reported associations rather than a complete account of every scheme or market condition.

Key ideas

  • The study relates Twitter activity to cryptocurrency pump-and-dump events using returns and trading volume.
  • Twitter promotion is reported to attract attention to schemes and coincide with abnormal returns before events.
  • Investors relying on Twitter information are reported to delay selling after the dump.
  • Those Twitter-reliant participants experience larger losses than other participants in the analysis.

Tags

CryptoSentimentEvent-drivenMarket microstructure
Full text
# The Role of Twitter in Cryptocurrency Pump-and-Dumps


# The Role of Twitter in Cryptocurrency Pump-and-Dumps









We examine the influence of Twitter promotion on cryptocurrency pump-and-dump events. By analyzing abnormal returns, trading volume, and tweet activity, we uncover that Twitter effectively garners attention for pump-and-dump schemes, leading to notable effects on abnormal returns before the event. Our results indicate that investors relying on Twitter information exhibit delayed selling behavior during the post-dump phase, resulting in significant losses compared to other participants. These findings shed light on the pivotal role of Twitter promotion in cryptocurrency manipulation, offering valuable insights into participant behavior and market dynamics.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.