How Finfluencers Shape Market Sentiment: What the Research Shows

Financial influencers — or “finfluencers”— have become fixtures on social media platforms, offering stock tips, cryptocurrency analysis, and investment commentary to millions of followers. But do these voices actually move the needle on how the broader investing public feels about markets? A recent study analyzing 80 million social media posts provides some answers.

The Research Approach

Researchers from Department of Information Systems and Information Management from University of Cologne and Stockpulse set out to examine whether finfluencers have measurable predictive power over crowd sentiment in financial markets. Rather than relying on anecdotal evidence, we took a data-driven approach: analyzing a massive dataset of social media posts about stocks and cryptocurrencies.

The study distinguished between two groups. The first consisted of actors with high “social networking potential” — essentially, users whose reach and engagement metrics suggest they have the capacity to influence others. The second group represented the broader crowd of everyday investors and commenters.

Using transformer-based machine learning models (a type of AI particularly suited to understanding language), we constructed sentiment time series for both groups. We then applied panel vector error correction models to examine how sentiment flows between finfluencers and the crowd over time.

Key Findings

The central finding: finfluencer sentiment does predict crowd sentiment in the short term. When influential accounts express positive or negative views about particular assets, the broader community’s sentiment tends to follow. Notably, this relationship doesn’t work in reverse—crowd sentiment doesn’t predict what finfluencers will say next.

This one-directional influence aligns with herd theory, which suggests that individuals in uncertain situations look to perceived experts or leaders for guidance.

Two additional patterns emerged from the data. First, the effect was stronger for cryptocurrency assets than for stocks. Crypto markets, being newer and less covered by traditional financial media, may leave retail investors more reliant on social media voices for information and sentiment cues.

Second, uncertainty amplified the effect. When the crowd appeared more uncertain — as reflected in mixed or volatile sentiment—finfluencer posts had greater predictive power over subsequent crowd sentiment. In other words, people seem to look to influential voices more when they’re less sure what to think.

Why This Matters

These findings carry implications across several domains. For regulators, the research provides empirical support for concerns about market manipulation through social media influence. The demonstrated causal relationship between finfluencer sentiment and crowd sentiment suggests that coordinated or misleading posts could meaningfully distort market perception.

For social media platforms, the study adds to the body of evidence that financial content deserves particular scrutiny. Understanding how influence operates in financial discussions could inform content moderation policies and disclosure requirements.

For investors, the research serves as a reminder that social media sentiment—especially from prominent accounts—may reflect influence dynamics as much as fundamental analysis. Recognizing that finfluencer opinions shape crowd views, rather than necessarily reflecting superior insight, is a useful frame for evaluating the information environment.

Limitations Worth Noting

The study examines sentiment prediction, not market returns. Demonstrating that finfluencers influence how the crowd feels about assets is distinct from showing they can move prices or predict performance. The relationship between social sentiment and actual market outcomes involves additional layers of complexity.

We also acknowledge limitations in the methodology, though the overall finding — that high-influence accounts have measurable predictive power over crowd sentiment—appears robust across our various analytical approaches.

The Bigger Picture

This research sits at an interesting intersection of financial markets, social media dynamics, and information systems. While influencer marketing has been extensively studied in consumer product contexts, the financial domain presents different stakes and regulatory considerations.

As retail participation in markets continues to grow, and as social media remains a primary information source for many individual investors, understanding these influence dynamics becomes increasingly relevant. The study offers a framework for thinking about how sentiment propagates through financial social networks—and who holds the power to shape it.

Please contact us (use the contact form on our website) if you want to receive a copy of the full paper.