If we have learned anything about the internet in recent years, it is that we should never underestimate the power of social media.
Much of this power lies in the ability of social media platforms to influence individuals into making certain actions or thinking in a certain way. This power is something that has been leveraged extensively by companies in recent years, which have used social media platforms to drive engagement and to create sales conversion opportunities.
Just as social media can be used to drive sales for businesses, however, it can also be used to generate interest in and behaviors towards other commercial activities.
One space where we have seen this dynamic at play in recent years is the cryptocurrency sector. This has been particularly true of a newer, younger generation of investors, who have looked at cryptocurrencies as an alternative to the mainstream financial sector they feel locked out of.
But what is the link between social media and crypto? And how can social media affect cryptocurrency prices?
Social media and crypto: What’s the link?
Much like many other topics, social media has been used as a platform for individuals to share information about cryptocurrencies. This includes the latest news in the cryptocurrency world, as well as investment advice from both qualified and unqualified professionals.
Social media has proved to be a perfect platform from which to share this information, as cryptocurrencies exist on the outer limits of traditional media platforms in much the same way that cryptos themselves are on the fringe of the investment world.
Although cryptocurrencies are very much mainstream these days and generally get coverage on most major news channels, this was not always the case. As a result, in the earlier days of cryptocurrencies, those wanting to learn more about this new technology generally had to go online. This created a strong link between social media platforms and crypto from earlier on, which is a link that remains to this day.
One of the times when we see the relationship between social media and cryptocurrencies particularly strongly is when crypto news starts to trend.
Topics start to ‘trend’ on social media when a particular topic is widely mentioned or discussed on the internet. Topics are ‘trending’ when they experience a sudden surge in popularity in a limited amount of time.
Once a topic starts to trend, it has a snowballing effect. Awareness that a topic is trending will only lead to it being more widely discussed.
We have seen this effect many times in the history of cryptocurrencies. For example, trends on TikTok have contributed to the rise of the price of Dogecoin and Smooth Love price. Similarly, Elon Musk was able to send the prices of cryptocurrencies soaring when he announced that not only had he amassed a massive personal stake in a number of currencies, but also that his company Tesla would soon start accepting crypto payments.
Staying up to date
Another reason that social media and the crypto world have such a close relationship is simply because social media platforms are by far the best platforms to keep up to date with all the latest industry news.
Traditional media outlets tend to be much slower to react to news events such as the latest movements of Luna price, or other important industry developments.
We have seen this recently in the case of the FTX scandal, with news of this story breaking on social media days before it was picked up by traditional media platforms.
Due to this, social media tends to be the go-to source for many looking to keep up to date with all the latest news, developments and price movements in the crypto world. This is particularly important given how fast moving the crypto world tends to be, with new developments coming out all the time.
The dark side of social media and crypto
Despite the many positive associations social media has with the cryptocurrency sector, there is nevertheless a darker side to this story. While social media can help to keep investors up to date with all the industry’s latest news, it can also create problems for less experienced investors.
We have seen this most recently in relation to the social media star Kim Kardashian, who has been fined a whopping $1.26m by the SEC for advertising a crypto ‘pump and dump’ scheme that left millions out of pocket.
With these dangers in mind, social media platforms such as Instagram and Twitter need to carefully manage how cryptocurrencies are dealt with on their platforms. In particular, they need to develop policies that will protect would-be investors, while avoiding limiting access to important information.