Crypto

Social Media’s Effect on Social Media’s Effect on Cryptocurrency Volatility

Published

2 hours ago

October 12, 2024

Social Media’s Effect on Social Media’s Effect on Cryptocurrency Volatility

Social media popularity and cryptocurrency price trends are joined at the hip. This fact is true both in the extreme representations like Dogecoin and the standard cryptocurrencies that dominate normal discourse.

There is a case to be made that cryptocurrency could not grow this big were it not for the social media age. Bitcoin’s rise as a peer-to-peer coin took off in the early 2010s as Facebook and Twitter became part of everyday life. Meme coins like Dogecoin and PEPE are recent trends that perfectly illustrate the power of social media popularity and notoriety for cryptocurrencies.

Meme Coins As The Ultimate Symbol Of Crypto Notoriety

Around 2019, Elon Musk and a few other Twitter (now X) users started making jokes about Dogecoin. Soon enough, this meme coin went off and had rallies of over 1000% on specific days. Dogecoin would rally because its community of users were on board a rocket ship “to the moon.”

Meme coins like PEPE capture this connection very well. PEPE is inspired by the “Pepe the Frog” meme popular on right-wing chat boards. Once the PEPE token launched in mid-2023, it was an instant hit because of the power of the underlying meme. As of September 2024 PEPE has a market cap of $4 billion according to Binance. This makes it the 27th largest cryptocurrency in the entire market.

Cryptocurrencies benefit tremendously from social media traction. It is probably the most direct way of gauging crypto market sentiment and confidence. Some of this activity is unfortunately not organic and is part of elaborate pumping schemes by token promoters.

In a general sense, cryptocurrencies experience volatility based on social media activity. The ones that rely the most on social media sentiment experience the highest volatility levels. It is not surprising that Dogecoin had dramatic crashes after its historic rallies in 2019 and 2020.

Social Media And Crypto

The crypto sector started as a fringe sector in specific corners of the internet. It took around three years after Bitcoin launched for it to begin getting traction. In 2013, an infamous event occurred with the shutting down of the Silk Road marketplace which was a libertarian trading hub for all goods, including illegal items using Bitcoin.

Regardless, the marketplace displayed the power of internet socialization in crypto usage. This was a community of users that interacted in a decentralized manner and managed to pay for goods and services using virtual currencies.

Bitcoin quickly became a social media topic, and by 2017, Bitcoin price became a constant topic on Twitter. In late 2017, Bitcoin had its first epic rally in the social media age and caught the imagination of netizens.

Hype Is Key In Crypto

For traders, the challenge is understanding which cryptocurrencies have organic social media hype. Crypto traders will always talk up their investments, and it is tough to filter out the noise from genuine enthusiasm.

Social media has played a pivotal role in propelling this industry to where it is. After all, there is no way an asset class outside mainstream finance could establish itself without social media. A balanced way to use the information is to use social media traction as one of the parameters of a cryptocurrency’s performance rather than the sole determiner.

Crypto

Billionaires Are Deciding to Sell This Popular Cryptocurrency | The Motley Fool

Published

10 hours ago

October 12, 2024

Press Room

Billionaires Are Deciding to Sell This Popular Cryptocurrency | The Motley Fool

The new spot Ethereum ETFs are having trouble gaining traction. Should you be concerned?

The good news for Ethereum (ETH 1.77%) investors is that the world’s second-most-popular cryptocurrency is still up a modest 6% for the year. The bad news, though, is that the price of Ethereum is down nearly 25% over the past three months. Moreover, Ethereum is significantly underperforming Bitcoin (CRYPTO: BTC), which is up 50% for the year.

As a result, billionaire fund managers appear to be selling off their positions in Ethereum, signaling that a recovery may not be happening anytime soon. So if billionaires are deciding to sell this popular cryptocurrency, should you?

The spot Ethereum ETFs

The key catalyst for Ethereum was supposed to be the launch of the new spot Ethereum ETFs at the end of July. Just as the launch of the new Bitcoin ETFs in January led to a surge in the price of Bitcoin at the beginning of the year, the new Ethereum ETFs were supposed to lead to a surge in the price of Ethereum over the final months of the year.

In fact, some analysts thought that as much as $4.8 billion could flow into these ETFs by the end of the year. But these types of inflows simply have not materialized. For example, the two largest of the new spot Ethereum ETFs — the iShares Ethereum Trust (ETHA 4.19%) and the Fidelity Ethereum Fund (FETH 4.10%) — have collectively brought in just $1.5 billion in new money.

That’s well off the pace required to hit the target goal, with just over two months to go until the end of the year. While it’s too early to say that the new spot Ethereum ETFs have been a disappointment, that seems to be the growing consensus.

Investor outflows out of Ethereum

The spot Ethereum ETFs are still too new for there to be a complete list of institutions buying them, but some preliminary 13F data from the SEC is starting to trickle in. And there just doesn’t seem to be a lot of robust buying from billionaire fund managers. Of the nearly 25 institutions that have reported buying the new ETFs as of Oct. 4, only two have made purchases of $1 million or more.

Image source: Getty Images.

In fact, the big story over the past two months has been the extent of investor outflows from the new spot Ethereum ETFs. That made sense in August, when the crypto market experienced a “flash crash” and investors panicked. But we shouldn’t still be seeing outflows in October.

But that’s exactly what appears to be happening. On Oct. 1, for example, the Fidelity Ethereum Fund saw nearly $25 million in outflows, its highest daily total ever. Some crypto traders have even suggested that Ethereum might fall 10%-15% lower if these investor outflows don’t stop.

And if you look at numbers from CoinShares, which tracks institutional buying of different cryptocurrencies, the picture appears to be much the same. Every week, CoinShares puts out a digital assets report, showing flows into and out of popular cryptocurrencies, based on the holdings of large institutional investors. And in six of the past seven weeks, there have been net outflows for Ethereum. During one week in September, for example, nearly $100 million flowed out of Ethereum.

Why are billionaires selling?

So why are billionaire investors deciding to sell Ethereum? The easiest answer is that these investors simply don’t see the same upside potential with Ethereum that they see with Bitcoin.

Another answer could be that these investors do not see the same diversification benefits with Ethereum. Once you hold Bitcoin in your portfolio, do you really need to hold Ethereum to get exposure to the crypto asset class?

Moreover, Bitcoin is seen as a potential “risk off” asset, giving investors a potential hedge against inflation and economic downturn. In contrast, Ethereum is seen as primarily a “risk on” asset. As long as investors have serious concerns about the future direction of the U.S. economy, Ethereum may have a hard time gaining any traction.

Should you buy Ethereum?

If the smart money is deciding to sell Ethereum, you should obviously take notice, especially given that investor inflows into other cryptocurrencies appear to be recovering. Bitcoin inflows seem to be on the mend, as are those of Solana (CRYPTO: SOL), the leading Ethereum competitor.

At the end of the day, it comes down to whether you are buying for the short term or the long term. If your investment horizon is 12 months or less, it probably makes sense to pump the brakes on Ethereum. But if it’s much longer, there’s still a case to be made for buying Ethereum, which remains a best-in-class cryptocurrency with a stellar track record of delivering massive returns to investors.

Dominic Basulto has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.

Crypto

Fraud Friday: How to avoid falling for cryptocurrency scams

Published

17 hours ago

October 11, 2024

Press Room

Fraud Friday: How to avoid falling for cryptocurrency scams

COLORADO SPRINGS, Colo. (KKTV) – Experts with AARP ElderWatch say cryptocurrency scams have skyrocketed in the last couple of years.

These scams are commonly presented as offers on social media, like Facebook and Instagram, where the scammer poses as a cryptocurrency investment expert. The scammer then claims to be able to grow someone’s investment, sometimes by two, three, or even four times the investment amount.

“This is all smoke and mirrors,” said Mark Fetterhoff with AARP ElderWatch. “What scammers are trying to do with these situations is get you to trust them. They might even put up a fake platform on a website to make it look like your investment is growing exponentially, when in reality they pocket the money and are going to ask for more.”

A second common type of cryptocurrency scam involves a person posing as a government employee or something similar, telling the potential victim they have a payment due which can only be accepted as cryptocurrency.

“Many times scammers are sending people to a cryptocurrency ATM or a Bitcoin ATM in our community. These exist at gas stations, grocery stores, and drug stores,” Fetterhoff said. “This is 100% a red flag and you should disengage with that person immediately.”

Fetterhoff says the best way to protect yourself from cryptocurrency scams is to not engage with the sender.

Cryptocurrency scammers are often located overseas, which is why the FBI is the best agency to report these scams to. Click here to report a cryptocurrency scam to the FBI’s Internet Crimes Complaint Center.

To report fraud or financial exploitation to AARP ElderWatch, you can call 1-800-222-4444 and select option 2, or click here for more information.

Crypto

Horst Jicha skips bail in $150 million USI Tech crypto fraud case in New York

Published

1 day ago

October 11, 2024

Press Room

Horst Jicha skips bail in 0 million USI Tech crypto fraud case in New York

Horst Jicha discussing cryptocurrency.

Source: Team Business Global | YouTube

A German national who was under home detention in New York City on a $5 million bond guaranteed by his domestic partner and children in a case in which he was charged with overseeing a $150 million cryptocurrency fraud is now a fugitive.

“There’s a very active investigation underway to capture him,” said John Marzulli, a spokesman for the Brooklyn U.S. Attorney’s Office, on Friday, a day after the defendant, Horst Jicha, failed to appear in Brooklyn federal court as scheduled.

“We are going to forfeit the bond,” Marzulli added, meaning that prosecutors will seek to obtain the $4 million portion of the bond that was personally guaranteed by Jicha’s partner, children and three other people, all of whom live in Germany.

Another $1 million in cash to secure the bond had been deposited with the federal government.

Horst is suspected of having tampered with his ankle bracelet monitor on Oct. 3, a prosecutor from the Brooklyn U.S. Attorney’s Office told a judge Thursday at a hearing that was supposed to address pre-trial issues in the case.

After noticing that Jicha’s ankle bracelet was not working, Pretrial Services officials sent him an email directing him to visit their office the next day. Jicha did not show up, the prosecutor told U.S. District Court Judge Orelia Merchant.

Only then did Pretrial Services inform prosecutors that Jicha’s ankle bracelet had ceased working, 26 hours after becoming aware of that fact, the prosecutor told the judge.

Jicha’s defense lawyers did not immediately reply to a request for comment.

CNBC has requested comment from Pretrial Services in Brooklyn federal court.

U.S. Attorney Breon Peace gives a statement after a former U.S. Rep. George Santos court hearing on August 19, 2024 in West Islip, New York.

Michael M. Santiago | Getty Images

Jicha is scheduled to go on trial in the case March 31, where he faces multiple charges of securities fraud and conspiracy related to a multi-level marketing scheme known as USI Tech.

According to prosecutors, Jicha lied to retail investors when he told them they would make an average of 140% returns on their money in a 140-day period.

Investors were told that there were two ways they could make money: First, they could invest in what were purportedly bitcoin mining and trading operations. They could also earn commissions for referring others to buy USI Tech products, the indictment against Jicha says.

“In reality the platform was just a facade, and when questions arose, Jicha stole millions of his investors’ money and fled the country,” FBI Assistant Director-in-Charge James Smith said in January.

As of Friday, Jicha’s whereabouts were unknown. Court records show he had lived in Brazil and Spain before he was arrested in Florida in late 2023.

Jicha was released on bond in January, and had lived in Brooklyn.

Under the conditions of Jicha’s release, he was obligated to remain in New York City or Long Island, and not to leave his home save for court appearances, attorney visits or medical appointments, unless authorized by Pretrial Services.

Jicha, 64, also was required to surrender all passports and travel documents as a condition of his release.

Court records show that Jicha’s $5 million release bond was guaranteed and signed in January by his domestic partner Ewa Jicha, as well as by Jicha’s adult son and his three daughters, and by the boyfriend of one of Jicha’s daughters and by the boyfriend’s brother and father, court records show.

All of those people were residents of the German state of Baden-Württemberg, according to court records.

But under the terms of the bond, they are also personally responsible for the bond’s amount.

After Horst Jicha was released, Ewa Jicha acted as the third-party custodian for him, and was required to report any violations of his release to a U.S. Probation officer.

Jicha was arrested on Dec. 23 in Miami, after entering the United States for the first time in more than five years, to vacation there.

Prosecutors allege that Jicha launched USI Tech in Europe, where, as a co-founder and CEO, he claimed the company would make “cryptocurrency investments easy and accessible to the average retail investor.”

“In reality, it was a multilevel marketing scheme that relied on investors recruiting other investors below them to buy various purported cryptocurrency investments,” the U.S. Attorney’s Office said in January.

“In 2017, Jicha brought USI Tech to the United States and aggressively marketed it to U.S. retailers on social media and through in-person presentations in which he falsely guaranteed high returns on investments and made false claims about the legality of the platform’s investment offerings,” the office said. There are multiple videos on YouTube showing Jicha hyping the company.

In early 2018, after USI Tech came under regulatory scrutiny in the U.S., “it ceased all U.S. operations overnight, leaving investors with no ability to access their money and resulting in millions of dollars in losses.”

Prosecutors said that much of the missing money in the scam, “valued at approximately $150 million as of the date of his arrest,” was held in the form of ether and bitcoin cryptocurrency. After USI Tech stopped operating, that cryptocurrency was sent to digital deposit addresses controlled by Jicha.