The Role of Twitter in Cryptocurrency Pump-and-Dumps

ArXiv ID: 2306.02148 “View on arXiv”

Authors: Unknown

Abstract

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.

Keywords: Market Manipulation, Pump-and-Dump, Social Media Analysis, Abnormal Returns, Market Microstructure

Complexity vs Empirical Score

• Math Complexity: 3.0/10
• Empirical Rigor: 7.5/10
• Quadrant: Street Traders
• Why: The paper relies on standard event-study methodology and regression analysis with statistical significance reporting, indicating moderate empirical implementation with backtest-ready data, but contains no complex mathematical derivations or advanced statistical theory.

  flowchart TD
    A["Research Goal"] --> B["Data Collection"]
    B --> C["Abnormal Returns<br>Volume Analysis<br>Tweet Activity"]
    C --> D["Computational Analysis"]
    D --> E{"Key Findings"}
    E --> F["Twitter drives<br>attention & pre-event returns"]
    E --> G["Investors using Twitter<br>sell late & lose money"]