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Cryptocurrency investing …


A light-hearted and non-tax topic just for a change … after reading the following mini-article in last week’s New Scientist:

Reddit can predict crypto price changes

“Cryptocurrency traders could have tripled their money by basing their investments on whether the number of posts mentioning a currency on Reddit was greater than the day before.

Emiliano De Cristofaro at the University of California, Riverside, and his colleagues analysed around 130 million posts on 122 forums, or subreddits, about cryptocurrency from between 2005 and 2022.  They also tracked the price of 30 mentioned cryptocurrencies.

There was a correlation for most cryptocurrencies between the level of conversation, compared with the previous day, and price.  In that period, if someone had traded a cryptocurrency based on whether the number of posts rose, they could have made three times more than they invested.”

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Is this the equivalent of fixing the tables at Monte Carlo or improving the odds in Las Vegas?

With cheap access to crawler bots, it won’t take long for someone to work out that they can ‘influence’ the price via the social networks (not with convoluted spam invites to defraud the odd punter, but by wholesale smothering that instantly creates a false market that only the insider knows when to enter and when to leave).  Basically its the same as pumping and dumping, but without the need for humans (who are prone to making mistakes and are greedy/expensive – both of which increase risk to the perpetrator).

There’s a lot of BIG money (both ultra-rich individuals and major finance institutions) heavily invested in trying to convince the rest of us that crypto is the future.  So just wondered if any of those who have been loudly singing the praises of crypto for the last 2-3 years have any comments on why the market shouldn’t be considered as deeply flawed and open to control by a few outside of usual market forces?



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