Do Twitter influencers affect crypto prices?

Almost everyone in crypto has a Twitter account: starting from the most obscure blockchain startup and ending with opinion leaders who've made crypto their profession.

We've decided to find out what sort of impact influencers really have on crypto: for instance, which coins they tend to write about and if their tweets can affect the price.

To do this, we've analyzed over a million tweets by over a hundred influencers, all posted between 2018 and June 2020.

Summary

1. Influencers follow the news, not create it. When they start tweeting about a certain coin more often, it's because its price has changed – not vice versa.
2. The coins that get the most tweets are those that spend the most time in the Coinmarketcap top 10: BTC, ETH, XRP, LTC, TRX etc. It's worth noting that in 2018 Twitter influencers mentioned specific coins more often than in 2019.
3. The influencers who tweet about coins most often are those with 50k to 100k followers and an engagement rate above 500%. Thus, if you want to contract Twitter influencers to promote your crypto project, you should focus on this type of accounts.

Selection criteria

twitter influencers

We reviewed only those influencers who satisfied the following criteria:

1. 10k followers or above;
2. Tweeting about the industry as a whole rather than a certain blockchain or project. For this reason we didn't include Vitalik Buterin or John McAfee, though they are certainly important opinion leaders;
3. Active (at least 1-2 tweets a day);
4. Knowledgeable about crypto and value their reputation: that is, influencers who clearly know what they're tweeting about and don't shill scam coins;
5. Have an active, engaged following.

We ended up with a list of 123 accounts with a total of over 30 million followers. The number of followers varies widely (from 10k to 6.5 million), but the median value is 92 thousand.

Period

We've analyzed the activity of Twitter influencers for the period from January 2018 till June 2020. We intentionally omitted 2017: due to the overall market hype, the data for that period contains too much noise. Instead, we focused on the subsequent period of disappointment and the following plateau.

In the period under study, our influencers posted a total of 1.3 million tweets in English. After we excluded those that consisted only of emojis, links and images, we were left with 1.1m tweets.

Coins

We took the largest 200 coins from the CoinMarketCap rating, as of July 2020. After an initial sorting, 168 coins were left on the list.

Why were some coins excluded?

Our task was to identify all the tweets that mentioned specific coins. In our search queries, we used various tickers and name spellings. We had to exclude some coins, because:

1. We got zero results: no influencer mentioned the coin in the selected period;
2. Too much noise: some tickers also have a meaning as actual words (such as link, win, dad, eng, gas, data), so we got tweets that had nothing to do with the coin.

Influencers' activity and follower engagement rates

In total, there have been almost 138 thousand mentions of our 168 coins by the influencers from the list.

This means that circa 12 tweets out of 100 were about specific coins.

Just 30 influencers account for 70% of these mentions. From now on, we'll focus on these opinion leaders.

These 30 Twitter accounts mention coins most often.

The average number of followers for the active influencers is 56 thousand – lower than the overall mean of 92 thousand.

At the same time, the average follower engagement rate is 750%: twice higher than for other, less active influencers on our initial list (310%).

Here are the 30 top influencers sorted by their engagement rate:

Thus, if a crypto project wishes to use Twitter influencer services for promotion, it should work with accounts that:

- Regularly post about coins;

- Have between 50k and 100k followers. 'The more, the better' rule doesn't work here: our study shows that average-sized accounts have a higher engagement rate that 'whales';

- Have an engagement rate above 500%.

The accounts that satisfy these criteria are located in the central square.

The top 30 influencers by the number of coin mentions. The number of mentions is plotted along the horizontal axis, while the engagement rate is plotted along the vertical axis. The size of each circle corresponds to the number of the influncer's followers.

Market reaction to influencer tweets

trends in coin mentions

Bitcoin is the most tweeted-about cryptocurrency among influencers: BTC accounted for 44.8% of all mentions in 2018, and for 50.71% in 2020. Since Bitcoin is so clearly dominant, we decided to exclude it from the charts below and concentrate on the next 25 coins that get mentioned most often.

As you can see, in 2018 influencers tweeted about coins more often than in 2019. It's too early to draw conclusions about 2020, since we've analyzed the data for only 6 months of the current year. Overall, one can say that coins are mentioned more rarely – as you can clearly see on the month-by-month chart below.

Only 9 out of the 25 coins showed rising or neutral dynamics. For all the others, the number of mentions is falling. This can be due to the general disappointment followed by a plateau. When the crypto market collapsed in early 2018, thousands of coins that had been created to 'become the new Bitcoin' lost most of their value and traders' trust.

The link between a coin's price and its mentions in influencer tweets

We've combined two charts: the one showing the number of mentions for a coin on a daily timeline and the one showing its price fluctuations relative to USD.

All the charts demonstrate more or less the same thing: the mentions curve follows the price curve. When the price fluctuates strongly, influencers tend to write about the coin more.

We won't include all the charts here – only one example per group:

1) Cryptos that influencers are tweeting about less: Ripple (XRP) и Litecoin (LTC)

Note that the price and the number of mentions changed at the same time in the following periods: September & October 2018 / May 2019 / February 2020.

For LTC, we see a similar picture in late December 2018, when the market reversed and the price started growing, to peak in June 2019.

2) Cryptocurrencies that influencers now tweet about more Binance Coin (BNB)

3) Cryptocurrencies whose number of mentions remained stable: Cardano (ADA)

Because of the relatively low number of tweets, the correlation is less clear in this chart, but the overall trend is still visible.

4) Stablecoins (USDT)

Though the price of USDT remains stable, you can still see spikes on the mentions chart. This means that the influencers' interest in USDT was sparked by other factors, such as incidents surrounding the coin or something that happens to other currencies that are traded in pairs with USDT.

Judging from the charts, one might think that price fluctuations directly correlate with the number of mentions, with one influencing the other. Is this true? To test this hypothesis, we've plotted a correlation matrix.

From the left shows the zone of correlation between the price and the number of mentions by influencers. From the right is the correlation zone between the prices of different coins. The scale on the right shows the level of correlation.
As you can see, the correlation is strong in the right area. But in the left area, it varies from 0 to 0.2, which means a weak correlation.

This means that, even though the charts for price change and the number of mentions are visually similar, there is no direct or strong link between these two parameters. A growing number of mentions is just a consequence of the changes in price, not vice versa.