As the FCA warns over Kim Kardashian’s crypto ad, day traders say they aren’t swayed by online influencers
Social media influencers have less sway on day traders than their own research and technical analysis, new polling found, as the UK’s watchdog warns over how online personalities are being used to ramp up scam investments.
According to a survey of traders on platform Capital.com, 61% make decisions based on research and technical analysis, compared to 16% who say they are affected by social media influencers.
Capital group chief executive Jonathan Squires said retail clients tend to “prioritise greater education and independent research when it comes to making trading and investing decisions,” rather than relying on online personalities.
The findings in the poll of 1,677 traders between 14 and 20 June come despite a growing trend of dubious investment adverts circulating online and retail traders engaging in copy-cat trading, following popular figures on forums such as Wall Street Bets.
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Regulators remain concerned about the ability of celebrities to sway their followers and continue to fight for tougher controls over what investments social media influencers can promote online.
Reality TV star Kim Kardashian recently encouraged her 250 million followers on Instagram to join the “community” at crypto firm Ethereum Max.
In a speech on 6 September, Financial Conduct Authority chair Charles Randell said that the post “may have been the financial promotion with the single biggest audience reach in history.”
While the post was marked as a paid-for promotion, the regulator said it remained concerned over how celebrity brands are being hijacked by fraudsters to hype high-risk ventures.
“In line with Instagram’s rules, she disclosed that this was an #AD. But she didn’t have to disclose that Ethereum Max – not to be confused with Ethereum – was a speculative digital token created a month before by unknown developers,” Randell said.
“Of course, I can’t say whether this particular token is a scam. But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all.”
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The regulator is currently trying to coax social media giants into taking firmer action over the financial adverts that are placed in front of retail customers.
In an unusually political step for an arms-length regulator, the FCA has repeatedly said it would like the government to include financial harms in the Online Safety Bill currently working its way through parliament, noting that paid-for adverts, “the main source of online investment scams”, remain untouched by the legislation.
Capital’s polling suggests 22% of day traders rely on media outlets to some extent when making their decisions.
Currently, the FCA has the power to ban financial promotions, but has a limited remit when it comes to unregulated products such as cryptocurrencies.
To contact the author of this story with feedback or news, email Justin Cash
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