The Lies of the Crypto Market: How Fake News Affects Prices from Amateur to Professional

The crypto market has an absurd cycle - every so often, a significant false news story emerges. While veterans have become numb to certain recurring fake news, when enough people believe that a piece of fake news will affect prices, it indeed has a substantial impact on the market.

Looking back at the development of the crypto market, those heavyweight fake news stories have truly influenced the direction of crypto assets. Behind a piece of fake news, one can even see a hidden information dissemination chain.

Crypto Fake News Chronology: Key Events Overview

2017: The death of Vitalik, the first lie in the blockchain world

June 26, 2017, was a milestone in the history of fake news development in the cryptocurrency market. That afternoon, a message appeared on an anonymous forum: "Vitalik Buterin died in a car accident." This rough rumor triggered the first market crash in cryptocurrency history caused by fake news within the next few hours. ETH fell from $317 to $216 in 6 hours, a drop of nearly 32%.

About 10 hours after the rumor spread, Vitalik himself posted a photo on social media holding the Ethereum block number and hash value of the day to refute the rumor, proving he is still alive through the blockchain itself.

This event reveals a cruel truth: in the early days of the crypto market, the destructive power of an anonymous post could be comparable to an official announcement. The early fake news creators were mostly amateur players, who either established so-called insider groups on instant messaging platforms or posted on anonymous forums. This is a market with extreme information asymmetry, where retail investors fumble in the dark, and any slight movement can trigger a stampede.

2018: A large investment bank incident, did Wall Street abandon Bitcoin?

On September 5, 2018, the crypto market was shrouded in the gloom of a bear market. A well-known American business website published a report stating that a major investment bank had shelved its plans for a cryptocurrency trading desk. This news was seen as a signal that encryption was being abandoned by mainstream financial institutions.

The next day, the plot took a turn. The CFO of the investment bank stated at a technology conference when asked about the matter: "I was puzzled yesterday, when did I make this decision? This is fake news."

But the clarification came too late. During that panic-stricken 24 hours, a large number of investors had already cut their positions and exited. According to certain media reports, the prices of Bitcoin and other digital currencies plummeted after this unverified news, with a total market value dropping by 12 billion dollars within an hour, and Bitcoin itself fell by more than 6% that day.

2021: A large retailer's alleged collaboration with a certain cryptocurrency, news trading begins to show signs.

The fake news about a large retailer collaborating with a certain cryptocurrency that occurred on September 13, 2021, is a premeditated crime through and through.

That morning, a global leading press release service published an announcement claiming that a major retailer would establish a significant partnership with a certain encryption currency. The press release was well-crafted and included all the elements of a professional press release.

Some crypto media outlets started scrambling to report this information, and most importantly, the official account of a certain cryptocurrency retweeted the news. The market reacted quite dramatically, with the price of that cryptocurrency starting to rise vertically and trading volume surging. Mainstream media also joined the dissemination chain.

However, just as the market was caught up in the frenzy, the retailer's PR team discovered anomalies. After urgent verification, they issued a statement: this is false news, and there is no cooperation between the two parties.

Subsequent investigations revealed that 48 hours prior to the release of the fake news, there was unusual trading of bullish options for that encryption currency in the market. The manipulators profited millions of dollars from this scam through careful planning.

2023: A certain crypto media misreported, prioritizing traffic over verifying the truth.

October 16, 2023, is a day worth reflecting on for the crypto market media industry.

At 1:17 PM, a screenshot from an instant messaging group began circulating in the crypto community. The screenshot shows a message that allegedly appeared on the interface of a financial information platform: regulatory authorities have approved a Bitcoin spot ETF from a large asset management company.

The social media team of a certain global largest crypto media outlet saw this news. They faced a dilemma: should they spend time to fully verify it, risking being scooped by other media? Or should they publish it immediately to seize the traffic?

At 1:24, just 7 minutes later, the media posted this "breaking news" on its official account.

The market's reaction was immediate and intense, with the price of Bitcoin soaring from $27,900 to $30,000 in the next 30 minutes, an increase of over 7%. However, the excitement quickly turned into confusion. Observant individuals began to raise questions.

At 2:03 PM, 39 minutes after posting the tweet, the media deleted the original tweet. But the damage was already done. In less than an hour, the market experienced a complete cycle of ups and downs.

This incident has sparked intense discussions within the industry. A sharp viewpoint argues that when the media prioritizes speed over accuracy, they cease to be media and instead become tools of market manipulation.

2024: Regulatory agency social media accounts hacked, regulators are also victims.

In January 2024, an official social media account of a regulatory agency released false news about the approval of a Bitcoin ETF. According to subsequent investigations by law enforcement, the attacker gained control of the account through a SIM card swap attack. The price of Bitcoin rose from $46,600 to $47,680 after the fake news was released and fell to $45,627 after the rumor was debunked.

In October 2024, law enforcement arrested the suspect. Court documents indicate that this was a premeditated financial crime, with the attackers having established a large number of Bitcoin long positions before releasing false information.

Over the past decade, fake news about cryptocurrencies has evolved from "unintentional mistakes" to "deliberate crimes." The technical barriers, scale of funding, and level of organization have all upgraded, and while investors may have avoided one instance of fake news, there is no guarantee they won't fall victim to the next.

When the truth is diluted

In the crypto market, tracking the source of a piece of fake news is often futile. When a certain type of news stirs up waves in the market, the large number of shares, algorithm recommendations, and the increasing influence of self-media make it impossible for anyone to clarify where the information originally came from.

A typical path for the spread of crypto fake news can be like this:

1. The first layer source is usually small instant messaging channels or groups, and tracking the source is almost impossible.
2. The second layer of the small circle is fermenting and spreading among several related groups, beginning to add "evidence".
3. The third-layer encryption media platform gives messages a "quasi-official" color.
4. The fourth layer of opinion leaders intervenes, most choose the strategy of "retweeting but not endorsing."
5. The fifth layer of market reaction, once the price begins to fluctuate, fake news gets "market validation".

When a message is disseminated through multiple layers, tracing back to its source becomes almost impossible. Each layer of dissemination adds new "details" and introduces new interpretations until the original information is completely diluted.

In the crypto market, rumors can spread irresponsibly and quickly, while debunking them requires rigorous evidence and logic. Spreading panic/exclusive news may create trading opportunities, but debunking rumors does not yield direct benefits.

Each participant acts rationally according to their own interests, but all these "rational" choices combined create a collectively irrational outcome. The market is repeatedly fooled by fake news, yet it seems that no one can or wants to break this cycle.

This may be the new meaning of "Three Men Make a Tiger" in the era of encryption: it is not that three people saying it makes it true, but rather that when enough people believe it, it truly affects the market. In this process, the truth itself becomes less important.