According to a study conducted by the University of Nottingham Business School (NBS), crypto influencers have a significant impact on the price and volume of crypto assets, but only for a short time.
Over a period of six months, NBS and the Austrian University of Klagenfurt researchers analyzed more than 1,000 videos about cryptocurrencies that were published on YouTube channels with more than 200,000 subscribers.
Although YouTubers claim that they don’t provide financial advice, many bloggers promote digital assets as coins that can increase in value up to 100 times, according to the study authors.
Some channels even create “shopping lists” for subscribers to promote certain crypto assets. The study focused on coins and tokens with a market capitalization of less than $100 million.
After analyzing the daily trading volume for at least 45 days before the publication of the video on YouTube, the researchers did not notice any bursts of activity.
However, the very next day after the appearance of promotional videos about certain coins, the value of these assets increased by an average of 7%. Additionally, the price behavior of tokens was inversely proportional to their market capitalization.
Small tokens showed a yield of almost 9%, while the growth of crypto assets with medium and large capitalization was 7.5% and 3.7%, respectively.
Despite the apparent impact of influencers, the study concluded that their influence does not last long, as prices usually return to their previous levels within three days and sometimes even show a negative trend.
Alexander Brauneis, professor of finance and innovation at NBS, explains that new cryptocurrency projects appear every day, and even experienced investors may not have time to keep track of potentially profitable coins.
Therefore, many retail investors rely on information posted on dedicated YouTube channels, which creates a clickbait environment that increases people’s interest in investing in advertised tokens.
The people who run these channels create short-term demand for the illiquid coins that videos are made about.
The UK Financial Conduct Authority (FCA) previously urged users not to trust cryptocurrency influencers, as doing so could result in users losing their investments and being unable to protect their rights.
Recently, the FCA proposed introducing a two-year prison sentence for violating the requirements for advertising cryptocurrencies.