John McAfee, the creator of the once indispensable McAfee Antivirus got involved in the cryptocurrency world a few years ago. Last year, he made headlines constantly with his frequent cryptocurrency boosting Twitter posts.
Each time he made such a post, the price of the asset he promoted would jump almost immediately after, and was typically followed by a sharp slide in price.The Daily Bit refers to this concept as “the McAfee effect”.
The McAfee Effect
Let’s take a look at a few of the blockchain currencies that John McAfee recommended on his Twitter account. One of those is Reddcoin. Prior to the mention by John McAfee Reddcoin was trading at less than one cent.
Following the tweet, prices peaked at nearly 3 cents before sliding back down to a current slump of about one cent. A price move from $0.0012 to $0.03 represents many magnitudes of growth over a relatively short period. It should be noted that the price today is still 10 times higher than where it was earlier.
One of the most famous, or rather infamous, assets that McAfee promoted is Verge (XVG). Back in December, McAfee released a series of tweets identifying Verge as a “best buy” and saying that privacy coins like Verge, Zcash, and Monero “cannot lose”.
Shortly after the tweets appeared, prices for Verge went from one cent all the way up to over $0.25, representing a 25-fold increase in about a week. Similar to what happened with Reddcoin, Verge has since dropped off and is now trading for about eight cents each.
Foul play involved?
Following the discovery and tracking of the McAfee effect, some in the cryptocurrency community has been accusing Mr. McAfee of orchestrating pump and dump operations. Fears of this became especially apparent when McAfee’s official Twitter account was hacked and was used to promote several cryptocurrencies without McAfee’s approval.
There was also a fake Twitter account that had a very similar name to McAfee’s which may have been used to trick people into sending large cryptocurrency payments in exchange for a mention.
Urgent: My account was hacked. Twitter has been notified. The coin of the day tweet was not me. As you all know… I am not doing a coin of the day anymore!!!!
— John McAfee (@officialmcafee) December 27, 2017
So, was there any foul play in this circumstance? It’s pretty safe to say that it is entirely possible for someone to have made use of McAfee’s tweets in order to gain massive returns. There has even been some murmuring about bots that analyze all of McAfee’s tweets.
When McAfee mentions a specific cryptocurrency ticker symbol, the bot then issues a massive buy order and then waits to resell it once the prices going up 10 times or so. It’s entirely conceivable that it is largely the actions of these bots that is causing the price to shift.
There is also no way to know if McAfee himself was profiting from his tweeting. As McAfee is already a very wealthy man, it would not at all be necessary for him to do this. However, all we have in this regard is conjecture.
Avoid the hype
One lesson we should all take away from this is that it’s important to avoid hype and sudden price hikes. While many people seem to be blinded by sudden surges in price thinking that they found the next bitcoin or Ethereum, this is not at all a wise investment practice.
Instead, what makes the most sense is careful and planned investments into well researched and understood assets. One should never make an investment decision based solely on the ticker price. While that can be an important consideration, it should absolutely not be the only thing you look at.
Featured Image via telegraph.co.uk
