Robert Shiller has rightly identified crypto as a pure example of narrative economics: “A contagious story that has the potential to change how people make economic decisions.” The sizzle becomes irresistible. Decisions will be made based on perception rather than reality. inflation rate at 5% is still nothing like hyperinflation, or that Bitcoin has largely failed as a portfolio hedge throughout its history. soon, and so the world.” The tweet set off a festival of replies from Bitcoin evangelists, commanding followers to buy more. It’s happening.” He added: “It will happen in the U.S. Twitter Inc.’s billionaire Bitcoiner boss, Jack Dorsey, tweeted last week: “Hyperinflation is going to change everything. It’s no longer just the likes of “cryptopump999” repeating “Bitcoin is inevitable” or “HODL.” Some of the richest people in the world are hyping Bitcoin as a hedge against imminent economic catastrophe, no matter how thin or nonexistent the evidence. The role of social-media influencers in pushing investors’ buttons is also growing.
Self-regulation still seems the order of the day here. Big Tech firms seem emboldened by increased adoption, regulation and their own crypto strategies. imposed bans on a lot of crypto ads in the midst of Bitcoin’s last big boom-and-bust cycle in 2018, but they’re lifting restrictions now. Networks like Alphabet Inc.’s Google and Facebook Inc. Social media, for example, is clearly going to be a far bigger battleground for regulators. The post-Covid world has created a bull market for viral economic narratives that offer easy answers to a complicated world - and it goes way beyond billboards. (London’s transport agency this week told the Financial Times that it is not its job to check that ads follow the rules.)īut a crackdown on risky or fraudulent ad campaigns is not a magic wand. One of them, banned in March, targeted pensioners - who would have needed thick skin for the subsequent 48% drop in Bitcoin’s price.
There have already been some ad bans in the U.K., where watchdogs decided several marketing campaigns were misleading and irresponsible.
Some kind of clean-up would be welcome, even if cash-strapped sectors like public transport have to settle for less money from the crypto sector’s deep pockets. Financial Conduct Authority survey published this month found that 58% of people trading high-risk products like crypto were encouraged by social media and their friends. Technology rarely features. The risk of volatile prices and financial losses is relegated to teeny tiny small print. The main power of these ad campaigns comes from driving a Fear Of Missing Out (FOMO).
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