The ‘Elon Effect’ shows how opinion leaders shape the FinTech market – Cointelegraph

January 9, 2023 by No Comments

The power that influencers have in affecting public perception and therefore causing alterations in the value of a product, service, asset or currency has increased to the point where they can crash or uplift entire markets with their content and takes. 

The Elon Effect

In 2021, Elon Musk could send the price of the famous memecoin Dogecoin (DOGE) up by 50% with just a single tweet. He still has a lot of power over the crypto markets, and several people in the cryptocurrency world and traditional finance have accused Musk of manipulating the cryptocurrency market with just a few tweets.

Other popular influencers could cause similar effects through social media posts or promotional videos. But why do they have so much power? Well, it’s all down to the power of influencer marketing; research shows that approximately 80% of consumers are more likely to buy products promoted by influencers instead of ads.

Related: Taking down crypto influencers is one step that would help to heal the market

In the case of the crypto market, digital advertising has been partially irrelevant throughout the years due to multiple factors, the main one being that Google, Twitter and other social media platforms had banned crypto ads in the past. Therefore, promoting coins/tokens via influencers was the main marketing alternative for many cryptocurrency projects.

Let’s take FTX, for example — one of the top three crypto exchanges. It went from being an almost $40 billion crypto powerhouse to filing for bankruptcy. Its founder, Sam Bankman-Fried, has been seen posting strange, cryptic messages on Twitter following the FTX meltdown. Why? Who knows. But it’s leaving users, investors and even FTX employees confused.

With these ongoing shady and unclear messages, he is just adding more fuel to speculations and all sorts of theories — which only worsens the current scenario for the cryptocurrency industry.

Why we shouldn’t follow advice from influencers

The first, most important problem? Influencers’ advice and opinions are not always absolute or necessarily correct.

Even more, some of these influencers might not even have any familiarity or knowledge whatsoever about the product/asset/coin they’re promoting. Such was the case with reality TV star Kim Kardashian, who received $250,000 for promoting EthereumMax, a smart contract-enabled platform for building decentralized applications. Kardashian then had to pay $1.26 million in penalties, disgorgement and interest to the United States Securities and Exchange Commission.

“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chairman Gary …….