What social media giveth, it can also take away. After a year in which investors learned to watch Reddit for market sentiment, a deluge of online derision over Matt Damon’s cringe-inducing commercial for a cryptocurrency exchange poses a new challenge: how to measure scorn as an investment metric.
Paris-based Bloomberg Opinion columnistspoke with about celebrity shills for crypto. This is a lightly edited version of their conversation.
: Lionel and I are going to talk about … Matt Damon! Well, not only Matt Damon, but more generally about celebrities being used as pitchmen for cryptocurrencies. Last week, thefor pitching in a splashy ad that ran, especially in the U.S., during football games.
There have been two trends in this area over the past two years. One, celebrities ranging from social media influencers like Kim Kardashian to sports stars like Tom Brady and now movie stars like Matt Damon have become pitchmen for crypto. Two, investors have started taking social media very seriously. Social media sentiment has influenced investing patterns and share prices.
, which I want to unpack. Have we reached an sort of endpoint to these trends?
: I think it’s a turning point, a symbolic moment. In the ad, Damon walks through a futuristic hall of mirrors with the past milestones of human achievement behind him — from explorers to scientists to astronauts — and then intones the tagline ofbefore you realize he’s talking about a crypto exchange, Crypto.com.
There is a kind of idealism or utopianism attached to this that, maybe a year ago, might have seemed like a positive story for the mainstream adoption of cryptocurrency. People would’ve said, ‘Look at this: Matt Damon is a serious celebrity, there is serious money behind this.’ (It’s worth mentioning that the company says it spent $100 million on this global campaign.) And it would’ve seemed that this thing was unstoppable.
And now? We’ve had a year of volatile prices, and a shift in the pandemic mindset. People are no longer just sitting at home, thinking, ‘Well, I’m locked down and my future is completely unpredictable, so I might just put my savings into the market, whether it’s the stock market or the crypto market.’ Now the reaction from people on social media is to say, ‘This ad is a bit of a joke.’
Remember that a year ago, with things like the GameStop saga, the meme stock explosion and crypto in general, there was a kind of revenge of the retail investor, revenge of the day trader. The sentiment was anti-establishment, right? People were saying, ‘We trust celebrities on social media who are telling us that we can get rich and stick it to the Man by buying cryptocurrencies.’ Now we’re seeing some of that energy turned back against those same celebrities. If the promised gains from crypto and other kind of populist stock investments don’t materialize, I think we could see more of this rage directed against the wannabe leaders of the social-media masses, as opposed to the imaginary evil of governments and hedge funds who supposedly are kind of rigging the system for their own benefit.
It’s notable that the marketing blitz by crypto companies has increased in recent months. If you take public transport in London or Paris, you’ve seen billboard posters again from companies like CRYPTO.COM saying, in effect, ‘You are a schmuck and you risk being left behind if you don’t buy into this universe.’ This marketing spend has not resulted in a rebound in the price of cryptocurrencies. So if we’re talking about a turning point in the perception of these celebrity influencers, the fact that we haven’t seen a market rebound despite all of this money being put into marketing is another thing to bear in mind.
: Initially, the social-media enthusiasm you describe wasn’t taken seriously by, say, hedge funds and investment bankers. Now, just when they taking it seriously, the sentiment has turned.
: The institutional investors who were taken by surprise a year ago by the stampede of retail investors don’t want to be caught out a second time. There’s a whole cottage industry in trying to work out where day traders are placing their bets. The most obvious thing to do is to sort of just simply hang out a bit more on Reddit to see what’s being talked about. Alerts are being sent to clients saying, ‘Look, this is the sentiment.’
One of the funny things about the Crypto.com commercial is that very wealthy people with a lot of money riding on markets are going to be paying attention, not just to the ad, but to the reaction. Think of the all the investments set up to kind of track what social media is saying, as a way to see where people are putting their money; now, they are laughing at Damon, and you have to take that laughter seriously.
: And you have to figure a way how to calculate the impact of scorn.
: I’m sure that if you can track Twitter sentiment, you can see the negative sentiment around Damon.
And, without wishing to read too much into it, we could have a whole discussion about Matt Damon as a celebrity. If the ad was delivered by Tom Hanks, it might have had a completely different reception. Is this simply a case of a failed matchup between a product and a celebrity influencer?
: There’s also a question about whether this attempt to manufacture hype through advertising works at all, or whether sentiment is more organic, something that comes out of nowhere and becomes a social-media trend.
: I don’t really have any firm views as to the right or wrong way to go about marketing something. What I think might be happening is the combination of several realities, a lot of them economic. We are seeing a change in the economic environment — in the interest-rate outlook, in the inflation outlook. This changes the calculus on a lot of risky investments. The downward direction that bitcoin has taken recently echoes a lot of other different asset classes that are viewed as taking a risk on a moonshot.
We have lots of what investment strategists call. Bitcoin going down to $40,000 is still not exactly a burst bubble. I mean it’s not at $4, it’s still $40,000, which is still something that a lot of us would’ve considered impossible couple years ago.
There’s just the reality of a changing market environment, which causes investors to recalculate the risk. Imagine if you were choosing between putting that extra marginal dollar you have into bitcoin now versus — if interest rates go up — a reliable, boring interest-bearing bank account for a set amount of time. The latter might suit some people more than sticking the marginal dollar into something that’s very hard to actually value and that’s had an incredible ride.
So I don’t think it’s just a case of an ad that didn’t work where another might have. You’ve got to place that reality next to where consumers are after a year in which they’ve put money into this risky world of NFTs, meme stocks and so on. And if you think about how these have fared, the message from a celebrity influencer becomes harder to get through.
: Going back to that ad, and the tagline, “Fortune favors the brave.” I suppose you do have to be BRAVE to risk your fortunes on crypto.
: My problem with a lot of crypto ads is that they normalize, if not idealize, what is essentially just a punt. The marketing is designed to make you think, ‘Hey I’m just like Steve Jobs,’ or ‘I’m just like a tech entrepreneur. I’m just like an innovator. All I have to do is get on a crypto exchange’ — which, by the way, makes money whether I’m selling or buying — ‘and get into the game. Then I can be part of the part of the group too.’ There’s so much psychological manipulation, so many cognitive buttons being pushed.
The boring advice you have to keep repeating is: Don’t allocate more money for this stuff than you can afford to lose. And just bear in mind who your counterparty is, because there are so many stories of hacks or frauds. It looks too good to be true, but then you’re talking about a token created by people who are essentially anonymous, or you’re being asked to trade through platforms that are essentially unregulated.
If I was going to make an advert around crypto trading, I wouldn’t immediately think we should have pictures of explorers like the Wright brothers. That’s just ludicrous.
Another thing I want to raise is Matt Damon himself, as the face of this. Here’s someone who is known for his outspoken political opinions. I wonder what the story is with him and this particular campaign. It may be that he genuinely believes in what he’s promoting.
If we assume he’s just doing it for money, we might also wonder whether he and other actors and influencers are subject to the same forces that consumers are. Maybe he thinks to himself, ‘Today’s Hollywood champions are tech titans like Jeff Bezos or streaming platforms like Netflix. Maybe tech is the future, and maybe I too need to be in this world.’
There are other celebrities who have pitched for crypto, like Tom Brady and Kim Kardashian. I wonder if they really believe that this is the future. Or are they thinking, ‘Everyone else is getting rich on this, and I should too’? The 1% can feel the pressure of competition.
I would urge anyone interested in this to look at research by the Financial Conduct Authority, the U.K. regulator, which has done a lot of surveys on crypto trading, crypto investing. It has that a lot of it is driven by the feeling of competition against your peers, as well as word of mouth. So there are plenty of psychological engines behind this.
: I suppose that after the debacle with Matt Damon, some celebrities would be a little hesitant to attach their names to these kinds of campaigns.
: I would like to think so, but I feel like the only thing that will change this is if we see a sustained selloff, and it becomes hard to pretend that a bounce is around the corner. And if regulators, especially financial regulators, start looking into this and see it as more than just a normal sponsorship — then you could also see some changes. In the U.K., they’veon the subway. So it may be that regulators, too, have a role to play.
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