Discover more from SO WHAT? A Web3 Digest for Executives
The complicated and conflicted relationship between Web3 and media
CoinTelegraph’s false Bitcoin tweet is just the tip of a unique and challenging iceberg
Welcome back, we’ve been on a long hiatus but are back with the first of a two-part series on the media in Web3.
Last month, media outlet CoinTelegraph posted an erroneous tweet to its 1.9 million followers claiming BlackRock’s Bitcoin ETF had been approved. That set off a crazy price rally. It was a rare moment of madness in what has been a fairly quiet year for Web3, compared to recent years.
This week, we dig into just how a single tweet can cause huge ripples in a market, moving the price of Bitcoin by more than 10%. It isn’t just CoinTelegraph, Web3 media itself is steeped in conflict and is often running behind the news or latest rumours.
Don’t miss our second installment on Web3 media next Tuesday.
What’s going on?
The price of Bitcoin spiked 10% earlier this month when Web3 media outlet CoinTelegraph posted an incorrect claim on X that BlackRock’s application for a Bitcoin ETF had been successful.
CoinTelegraphed didn’t publish a story based on the claim and it deleted the post after BlackRock issued a denial. But that didn’t stop traders, who are always keen to find an edge or early information, from driving the price of Bitcoin from $27,700 to $29,400 in just one hour. The result was over $100 million in Bitcoin contracts liquidated and further fuel for those who don’t trust the media.
It was a unique situation but it did highlight the new paradigm that media has when it comes to covering Web3.
1. Disinformation is key
So how can a tweet move a market by 10%?
Welcome to Web3 where the market for trading cryptocurrencies is dominated by narrative. Unlike buying listed company stocks, crypto tokens don’t come with earnings reports or other standard metrics for assessing the business. Those companies that do provide numbers rarely go through the strenuous process of auditing that listed firms do.
That leaves a gulf of information. The upshot is crypto trading is mostly based on reputation and sentiment. Mix in that cryptocurrencies trade 24/7 through a range of accessible trading platforms and you have a very different beast—one where prices can swiftly change based on fragments of unverified information as traders seek an edge.
There’s still value in online media reports, particularly when they are thoroughly researched and rich with information from sources within the industry. But demand for instant information and ‘alpha leaks’—previously unknown information to gain trading insight—is such that social media fills a gap. And it’s one with little to no verification of information.
2. Conflicts for all journalists
The conflict in Web3 isn’t just around cryptocurrency trading connection with information from social media, journalists writing about the industry have their own quandary.
Reporters at tier-one media outlets, such as Reuters and Bloomberg, aren’t allowed to buy stocks and shares because doing so creates a conflict as they stand to benefit financially if they write positive stories about companies they invest in. (Conflicts run deeper but that’s a different topic.)
Those same rules apply to crypto, meaning the journalists can’t use a Web3 wallet or aren't familiar with how to make transactions. A lack of involvement means many struggle to understand Web3.
For reporters who are crypto savvy, conflicts loom. Outlets like Coindesk and The Block allow reporters to own small amounts of cryptocurrencies but it isn’t clear what they own and how much. Extreme transparency might mean sharing their wallet address, but most crypto users shy away from doing such is the level of information revealed. Plus multiple wallets are common.
A further complication arises from sponsored content, which is commonplace as companies pay to get their narrative out, while some media outlets—including CoinTelegraph—even invest in companies. Its ‘Accelerate’ program promises “advertising and support” in exchange for tokens or equity.
3. Crypto Twitter is the real media player
CoinTelegraphed said in a post-mortem that its social media team posted the ETF claim after it was misled by “an unconfirmed screenshot posted by an X user who claimed it was from the Bloomberg Terminal.”
There are lots of conspiracy theories—as is always the case with Web3—but taking the statement at face value shows the significance of Twitter (now X) for Web3. Indeed, there’s a reason why “Crypto Twitter” is a media entity in itself, not just a collection of users. Web3 is so new and fast-moving that traditional media struggles to keep up, or even understand.
Much of the narrative around Web3—be that conversation around future prices, new technologies, scams and such false claims—takes place on X. That can leave media outlets chasing the news and struggling to be relevant or gain readers. Those are exactly the ingredients for misinformation which is further amplified because it comes from a media outlet.
The unfortunate takeaway is treating every piece of information with skepticism, with a generous pouring of salt on top for good measure.
Bloomberg reports that the US Justice Department is looking for a $4 billion resolution from Binance as part of its investigation into the company—it is said CEO Changpeng Zhao could face prosecution as part of the package
Meanwhile, the SEC has charged Kraken with operating as an unregistered securities exchange, broker, dealer, and clearing agency
Coindesk has been acquired by Bullish, a crypto exchange started by long-time crypto group EOS (more on this next week)
Fidelity and BlackRock have both applied for Ether ETFs, giving the SEC more crypto ETFs to mull over approving
A16z released its latest spotlight on crypto report—it focuses on the impact of blockchains for policymakers
That’s all for this week!
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