How much does crypto news weigh for users’ investing strategies?

As the cryptocurrency industry evolves, the media coverage intensifies in influence. Investors and traders follow news on social media and blogs to determine their next move, considering
how fast crypto prices can change.
News is considerably helpful for anyone involved in the industry, as being up-to-date is essential to maintain a clear image for future investments.
However, news can also be misleading or inflict anxiety, especially when crafted by unreliable channels. Anyone checking the crypto news today knows to access only trustworthy sources, whose journalistic commitment is to present events as they are, without the press intervening with personal opinions.
Basing your strategies on news coverage is different than considering the advice of crypto advisors, which is why you must carefully select your preferred news media. Here’s why these matters.
News updates can influence cryptocurrency prices
Although government bodies do not deliver cryptocurrencies, they can be influenced by factors like demand and supply, the economy’s situation, and a country’s regulations. However, news covers a broader image of cryptocurrency and can positively or negatively affect prices.
When news discusses new projects or improves legal frameworks on cryptocurrencies, investors tend to become hopeful of a better image of the industry, so they increasingly diversify their portfolios. On the other hand, regulatory restrictions or legal issues can heavily affect prices.
Let’s take the example of XRP, one of the leading cryptocurrencies in terms of market capitalization. In 2020, the SEC (Securities and Exchange Commission) accused the company of working with unregistered securities in a long-term lawsuit.
Of course, the event affected the XRP price and the view of the brand, but the recent legal victory, where the SEC withdrew the lawsuit, led to a massive surge in XRP value due to increased investor confidence.
What type of news can influence crypto prices?
Different news coverage can have the same impact on prices. For example, regulatory news that includes bans, endorsements, or massive changes negatively affects the market, including some of the most powerful assets, Bitcoin and Ethereum.
That’s because it induces FOMO (Fear of Missing Out) and FUD (Fear, Uncertainty, Doubt). However, positive regulatory news can send investors into a frenzy.
Technological developments are some of the greatest news for investors and traders, as they show how the industry evolves, leading to advancements that will improve the industry.
For example, when Ethereum shifted its consensus mechanism from proof of work to proof of stake, the event led to a surge in crypto prices due to the network’s commitment to sustainability, low gas fees, and rapid transaction times.
Finally, security incidents tend to affect prices, as network breaches or wallet cybersecurity attacks hinder the reputation of a blockchain or decentralized application.
For instance, the FTX incident, which led to the theft of $477 million worth of cryptocurrencies, shook the industry and increased lack of trust.
How do news-driven price movements correlate with emotions?
As previously mentioned, the media can inflict FOMO and FUD through negative news that strains investors’ capacity to make an informed decision. Social media news, especially, can send shockwaves through the market, leading to panic selling and rapid price declines.
Some types of news choose their titles and descriptions to attract more readers, but all they do is alarm investors, whose sense of urgency intensifies after reading the news.
On the other hand, even good news crafted to attract readers can lead to a boom on the market, as investors are afraid to miss out on opportunities to capitalize on their assets. Therefore, they buy many more assets than needed, which translates into a boom in prices.
Finally, the role of influencers is often underestimated when it comes to their social media impact. Many of these crypto enthusiasts who craft a seemingly professional online personality lack formal expertise and operate without knowing the power they have over their communities.
Therefore, followers of these influencers might copy their portfolios or use their advice and be exposed to scams.
Can users avoid poor social media coverage and scams?
Being up-to-date with the latest crypto news is necessary for traders to be able to adapt their strategies. This means reading the news, following social media accounts, and consuming different types of media to form an opinion.
Unfortunately, if your feed includes a certain type of content, which is prone to scams and poor knowledge, you must craft it from zero again.
This means unfollowing all accounts or channels known for their lack of expertise in cryptocurrencies and following more reliable sources. This also applies to news outlets, so make sure to get your info from brands that are as unbiased as possible.
It’s best to remember that there’s no safe and fast way to gain revenue from cryptocurrencies or other types of investments. Practicing due diligence is always a good idea, especially when investing in volatile assets.
What are some common types of crypto scams?
Like any other type of financial fraud, crypto scams are prevalent on social media, where anyone could engage with users whose expertise in the industry is scarce. This means they can easily take advantage of a beginner’s naivety through:
BTC investment schemes in which fraudsters ask for an upfront fee in exchange for a promise to earn millions;
Rug pull scams usually happen in new projects where scammers run with investors’ money after promoting a non-existent coin;
Romance scams represent relationships where scammers gain the victim’s trust enough to receive money or information about their cryptocurrencies;
Social media giveaways promise cryptocurrencies with only a verification process requirement, but this often includes clicking on malicious links;
What do you think about the importance of news in crypto?
The emergence of cryptocurrencies is one of the most interesting technological advancements at the moment, which is why all news outlets talk about it. However, their impact on the investor sentiment is considerable, especially when news titles are misleading or unnecessarily panic-inducing.
Therefore, they can lead to price shifts as investors are either afraid, so they sell their assets, or too confident, so they buy.
This is how the market shifts based on social media and news.