X, formerly known as Twitter, has become the number one internet venue for cryptocurrency enthusiasts to interact with one another, shill their favorite tokens and consume daily news.

The relationship between X and cryptocurrency appears to be symbiotic: the fortunes of one frequently affects the other. This relationship has been compounded in recent times by the takeover of Twitter by self-professed crypto enthusiast, Elon Musk, and its subsequent rebrand to X.

The prospect of X potentially integrating cryptocurrency payments on-site was touted by Musk soon after his takeover. While this has yet to materialize en-route to X’s goal of becoming an “everything app,” the interplay between X and crypto continues to grow and evolve. 

Let’s look at the various links between X and crypto, and examine how the crypto market is affected by the daily commotion on the social media platform.

History of X and Crypto

In the years since the creation of Bitcoin, X has become the primary social media platform for cryptocurrency users. A recent study by CoinGecko queried 2,558 anonymous participants on their preferred social media platforms for reading and posting about crypto, finding X to be the most used platform by 41.7% of users.

Interestingly, 73.8% said social media was their primary source of crypto news, with X once again the most popular platform among newsreaders with 34.4%.

X’s popularity among crypto users is a double-edged sword. While X has proven to be useful in enabling the average retail investor or crypto hobbyist to communicate directly with developers, CEOs and marketers, the high concentration of crypto users in one place has presented a large target for scam-artists.

From fake profiles of celebrities promising extravagant wealth at a future date if you’ll just send them money now, to the more subtle and legally-gray area of influencers shilling tokens without disclosing that they’re doing so - X has been the center-point for millions of dollars in thefts in recent years.

In late 2023, a sophisticated hacker bot managed to drain $59 million worth of cryptocurrency from 63,000 unaware X users via fraudulent phishing ads on the social media site, and similar scams take place on a near daily basis.

But that’s not to say that the interplay between X and crypto is solely negative. The heavy concentration of crypto users in one place also creates a vibrant ecosystem that, according to some researchers, can even be used to predict the future price movements of Bitcoin and other cryptocurrencies.

Using X to Predict Crypto Prices

Because of the sheer number of crypto users on X, and the useful hashtag system which makes the subject of posts easy to identify, X has become one of the largest living depositories of public sentiment data on the internet today.

And researchers have taken notice. A 2018 study by Li, Chamrajnagar, et al, claimed to offer “the first academic proof of concept that social media platforms such as Twitter can serve as powerful social signals for predicting price movements in the highly speculative alternative cryptocurrency, or "alt-coin", market.”

The researchers measured the public sentiment found in X posts against market price movements, and found they could make successful price predictions with a 0.81 correlation. 

Another 2023 paper found that price increases of cryptocurrencies like Cardano and Binance Coin were highly correlated with the expression of positive sentiment on X (tweets containing the aforementioned coins along with a positive expression).

A 2021 study by the Copenhagen Business School found that there was “not enough evidence to confirm a significant relationship between the sentiment derived from Twitter and the price volatility of the cryptocurrency,” however it did note that social media-based sentiment analysis could still prove useful if different techniques were applied.

Influence of X Owner, Elon Musk

Prior to Elon Musk’s takeover and twitter and subsequent rebrand to X, the billionaire had frequently used the social media platform as a base from which to trigger price pumps on various cryptocurrencies - most notably Dogecoin.

In 2022 alone Musk’s tweets resulted in price pumps for Dogecoin on sixteen separate occasions. The easy access to millions of followers on X gives tweets from influential figures like Musk the potential to start a tidal wave, and this is what happened in 2021 when Musk’s Dogecoin tweets sent the coin to a new all-time high after an incredible 23,000% price surge.

Musk’s use of the most modern and trendy form of communication - memes - was integral to Dogecoin’s ascendance. The image below is typical of memes posted by Musk which resulted in buyers rushing to Dogecoin.

People bought into Dogecoin on the assumption that Musk’s vocal support would fare well for the coin, and propel it to extravagant growth. Whether it was actually Musk’s influence, or simply the perception of Musk’s influence which pumped the coin, the end result was a new all-time high for Dogecoin.

Musk’s crypto tweets have died down of late - perhaps a result of his increased responsibilities and liabilities as the site’s owner. But the recent furore created by Musk’s appointment to Donald Trump’s Department of Government Efficiency (DOGE) saw the meme-coin’s valuation surge once again. 

While plans to integrate crypto payments on X and turn the platform into an “everything app” have not materialized, Musk’s presence alone makes X an influential hub for crypto enthusiasts, and one which still wields considerable influence over the fortunes of crypto coin prices.

X and Crypto: A Dangerous Combination?

While X’s crypto dominance might be good for the company’s bottom line, one has to question the wisdom of so many people relying on the social media site to get their daily news.

Given the proliferation of dis/misinformation AI bots on social media platforms like X, the potential for millions of crypto enthusiasts to be led astray remains a very real threat. Partisan AI bots deployed in the run-up to the UK election produced posts that were viewed over 4 billion times, showing the potential for fake news to spread like wildfire on social media.

The fact that researchers have managed to find correlations between social media sentiment and crypto price swings may sound promising for would-be day traders who could benefit from such information. 

But it also presents a serious threat given that market manipulators could use this information to predict the market’s behavior, and increase the sophistication of their scams by knowing how people will react to specific situations.

Ultimately, X holds considerable influence over the state of the cryptocurrency market, and this can be leveraged by discerning users to gather information about new coins, monitor public sentiment and interact with their favorite communities and brands.

However, for those who are naive about the dangers of X, and of social media in general, the site can prove to be a turbulent sea of mis-and-disinformation, and could easily be the place where they lose some, or all of their cryptocurrency funds.

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