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What makes celebrity endorsements effective?
Much research has attempted to explain why celebrity endorsements work. (Photo by… [+] Axelle/Bauer-Griffin/FilmMagic)
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Celebrity endorsements have been around for centuries, and more recently, famous personalities have made headlines by participating in promotions related to the crypto/blockchain space.
Tom Brady, Matt Damon and Larry David, for example, have all been featured in high-profile advertisements associated with platforms where investors can purchase digital currencies.
Why do celebrity endorsements like these work in the first place?
This very topic has proven intriguing to researchers working in a wide range of fields.
Neuroscientific, psychological, sociological and economic literature contain search results associated with this particular subject.
While there are many angles one can use to attempt to answer this question, this article uses a short list of potential explanations, looking specifically at it from the perspectives of neuroscience, cognitive psychology as well as as consumer psychology and behavior.
Familiar faces = trust
One explanation for the power of celebrity endorsement is that we are naturally wired to recognize faces.
Jeff Stibel, an entrepreneur, investor and former academic who has written extensively about the human brain, wrote a USA Today column describing this ability as integral to the survival of human beings when living in the wild.
If a tribe member could quickly identify another person’s face, they could quickly determine whether that person was an ally or a potential threat, he explained.
While it’s easy to see why this ability might prove useful, Stibel also noted that people aren’t very good at telling the difference between the friendly faces of people they know in real life and those who are on the television.
Professor Michael Platt, a neuroscientist who teaches at the University of Pennsylvania and is director of the Wharton Neuroscience Initiativeoffered his expert opinion on the subject.
When asked if humans have a natural ability to recognize faces, Platt confirmed that they do, stating the following in emailed comments:
“Yes, we are programmed to recognize faces. We also seem to be programmed to pay attention to physical attractiveness (as an indicator for pursuing mating opportunities) and power (which is always important to be aware of),” he added.
“I say hardwired because apes and humans are preferentially interested in these qualities and will pay for information about sexy or powerful individuals. This information is spontaneously signaled in regions of the brain that mediate attention, reward and decision-making, in both monkeys and humans. So it’s deeply ingrained,” Platt noted.
follow the leader
A article appearing in Knowledge at Wharton, an economics journal published by the Wharton School of the University of Pennsylvania, took a different approach to explaining the usefulness of celebrity endorsements, focusing on the human tendency to gravitate toward celebrity endorsements. authority when making decisions.
The aforementioned article, which cited an academic article titled “How Celebrity Status and Gaze Direction in Advertisements Drive Visual Attention to Shape Consumer Decisions,” stated that “humans and primates will follow the lead of high-status, high-prestige individuals in their group by aligning their gaze or copying their decisions. .”
“This behavior is observed in nature, when monkeys look to what a higher-status monkey is looking at in trees, or in the office, when employees model their work after that of the highest-rated employee,” notes the article.
“When the leader succeeds, others need less evidence to make the same choice.”
Platt offered additional context on the topic.
“The decision to buy something, like any decision, evolves through a process of accumulation of evidence in the brain over time. What we look at and what we pay attention to is amplified in this process, to the detriment of other information,” he said.
“Because we, and other primates, follow the lead of individuals of high status and prestige, this amplifies the common target of attention – in this case, a specific product, making it more likely to be remembered and more likely to be used. chosen,” Platt said.
The halo effect
The halo effect is a cognitive bias that causes positive impressions we have of one thing (e.g. a celebrity endorsing a product) to turn into favorable perceptions of another thing (regardless of advertising).
For example, if we view a specific celebrity as beautiful and magnetic, we may associate a facial cream she promotes with the same virtues.
Because we admire celebrities, the halo effect around them is even more intense, Richard Lehman, a professor, speaker and author who teaches behavioral finance at UC Berkeley Extensiondeclared via a LinkedIn direct message.
Lehman, who also teaches at both UCLA Extension And California Polytechnic State Universityis the founder and chief educator of Behavioral Finance.com.
While the halo effect surrounding celebrities can be powerful, the extent to which potential buyers perceive them to be aligned with the product or service they are promoting is crucial, noted Dr. Simon Moore, a chartered psychologist at consumption, in comments sent by email.
“The perception of why the celebrity ‘is there’ is a crucial factor in the impact it has on consumers’ attitudes toward the product/brand,” said Moore, who is currently chief psychologist and CEO of the London-based behavioral strategy agency. BI.
“Research we’ve done with our brand clients shows that the more audiences ‘see’ the celebrity’s personal values and needs match those of the brand, the more they believe the celebrity actually approves of them on a level psychological/ideological rather than on a psychological level. a level of monetary gain,” Moore said.
The psychologist provided additional context on the topic.
“The research results show that if consumers perceive that the celebrity was motivated to make the endorsement not only by money but also by the quality of the product, this has a significant positive effect on attitude towards the brand” , he noted.
Platt also spoke using the results of scientific experiments to illustrate the impact of the halo effect.
“We tested something like this in monkeys, building on our multiple studies showing that monkeys prioritize information about attractiveness and power,” he noted.
“We conducted an advertising study with monkeys in which we paired photos of sexy or powerful monkeys with specific brands (e.g. Pizza Hut, Toyota) and photos of unattractive or subordinate monkeys with other brands (e.g. example Dominos, Honda)”, explains the academic. continued.
“Later, we tested the monkeys’ preferences, for example between Pizza Hut and Dominos, or Toyota and Honda (there were many more brands). The monkeys consistently preferred (“purchased”) brands advertised by sexy or powerful monkeys,” Platt said.
“Thus, this halo effect appears to have deep evolutionary roots and is implemented in neural circuits that prioritize useful social information, which then biases circuits that gather evidence to support a decision,” he said. -he concluded.
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.
Bitcoin has surpassed the $63,000 mark for the first time since November 2021. (Chesnot via Getty Images)
Bitcoin has broken above the $63,000 (£49,745) mark for the first time since November 2021, when the digital asset hit its all-time high of over $68,000.
Over the past 24 hours, the value of the largest digital asset by market capitalization has increased by more than 8% to trade at $63,108, at the time of writing.
Learn more: Live Cryptocurrency Prices
The price appreciation was fueled by record inflows into several U.S.-based bitcoin cash exchange-traded funds (ETFs), which were approved in January this year.
A Bitcoin spot ETF is a financial product that investors believe will pave the way for an influx of traditional capital into the cryptocurrency market. Currently, indications are favorable, with fund managers such as BlackRock (BLK) and Franklin Templeton (BEN), after allocating a record $673 million into spot Bitcoin ETFs on Wednesday.
Learn more: Bitcoin’s Success With SEC Fuels Expectations for an Ether Spot ETF
The record allocation surpassed the funds’ first day of launch, when inflows totaled $655 million. BlackRock’s iShares Bitcoin Trust ETF (I BITE) alone attracted a record $612 million yesterday.
Bitcoin Price Prediction
Earlier this week, veteran investor Peter Brandt said that bitcoin could peak at $200,000 by September 2025. “With the push above the upper boundary of the 15-month channel, the target for the current market bull cycle, which is expected to end in August/September 2025, is raised from $120,000 to $200,000,” Brandt said. published on X.
The influx of capital from the traditional financial sphere into Bitcoin spot ETFs is acting as a major price catalyst for the digital asset, but it is not the only one. The consensus among analysts is that the upcoming “bitcoin halving” could continue to drive flows into the bitcoin market.
The Bitcoin halving is an event that occurs roughly every four years and is expected to happen again next April. The halving will reduce the bitcoin reward that miners receive for validating blocks on the blockchain from 6.25 BTC to 3.125 BTC. This could lead to a supply crunch for the digital asset, which could lead to price appreciation.
The story continues
Watch: Bitcoin ETFs set to attract funds from US pension plans, says Standard Chartered analyst | Future Focus
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Forensic Risk Alliance (FRA), an independent consultancy specializing in regulatory investigations, compliance and litigation, has welcomed U.S.-based cryptocurrency specialist Thomas Hyun as a director of the firm’s global cryptocurrency investigations and compliance practice. Hyun brings to the firm years of experience building and leading anti-money laundering (AML) compliance programs, including emerging payment technologies in the blockchain and digital asset ecosystem.
Hyun has nearly 15 years of experience as a compliance officer. Prior to joining FRA, he served as Director of AML and Blockchain Strategy at PayPal for four years. He established PayPal’s financial crime policy and control framework for its cryptocurrency-related products, including PayPal’s first consumer-facing cryptocurrency offering on PayPal and Venmo, as well as PayPal’s branded stablecoin.
At PayPal, Hyun oversaw the second-line AML program for the cryptocurrency business. His responsibilities included drafting financial crime policies supporting the cryptocurrency business, establishing governance and escalation processes for high-risk partners, providing credible challenge and oversight of front-line program areas, and reporting to the Board and associated authorized committees on program performance.
Prior to joining PayPal, Hyun served as Chief Compliance Officer and Bank Secrecy Officer (BSA) at Paxos, a global blockchain infrastructure company. At Paxos, he was responsible for implementing the compliance program, including anti-money laundering and sanctions, around the company’s digital asset exchange and its asset-backed tokens and stablecoins. He also supported the company’s regulatory engagement efforts, securing regulatory approvals, supporting regulatory reviews, and ensuring compliance with relevant digital asset requirements and guidelines.
Thomas brings additional experience in payments and financial crime compliance (FCC), having previously served as Vice President of Compliance at Mastercard, where he was responsible for compliance for its consumer products portfolio. He also spent more than seven years in EY’s forensics practice, working on various FCC investigations for U.S. and foreign financial institutions.
Hyun is a Certified Anti-Money Laundering Specialist (CAMS) and a Certified Fraud Examiner (CFE). He is a graduate of New York University’s Stern School of Business, where he earned a bachelor’s degree in finance and accounting. Additionally, he serves on the board of directors for the Central Ohio Association of Certified Anti-Money Laundering Specialists (ACAMS) chapter.
Commenting on his appointment, Hyun said, “With my experience overseeing and implementing effective compliance programs at various levels of maturity and growth, whether in a startup environment or large enterprises, I am excited to help our clients overcome similar obstacles and challenges to improve their financial crime compliance programs. I am excited to join FRA and leverage my experience to help clients navigate the complexities of AML compliance and financial crime prevention in this dynamic space.”
FRA Partner, Roy Pollittadded: “As the FRA’s sponsor partner for our growing Cryptocurrency Investigations and Compliance practice, I am thrilled to have Thomas join our ever-expanding team. The rapid evolution of blockchain and digital asset technologies presents both exciting opportunities and significant compliance challenges. Hiring Thomas in a leadership role underscores our commitment to staying at the forefront of the industry by enhancing our expertise in anti-money laundering and blockchain strategy.”
“Thomas’ extensive background in financial crime compliance and proven track record of building risk-based FCC programs in the blockchain and digital asset space will be invaluable as we continue to provide our clients with the highest level of service and innovative solutions.”
“FRA strengthens cryptocurrency practice with new director Thomas Hyun” was originally created and published by International Accounting Bulletina brand owned by GlobalData.
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Bitcoin fell in line with the broader cryptocurrency market, with ether and other altcoins also falling.
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Financial markets were weighed down by risk-off sentiment ahead of the Fed’s interest rate decision and press conference later in the day.
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10x Research said it is targeting a price target of $52,000 to $55,000, anticipating further selling pressure.
Bitcoin {{BTC}} was trading around $57,700 during European morning trading on Wednesday after falling to its lowest level since late February, as the world’s largest cryptocurrency recorded its worst month since November 2022.
BTC has fallen about 6.3% over the past 24 hours, after breaking below the $60,000 support level late Tuesday, according to data from CoinDesk. The broader crypto market, as measured by the CoinDesk 20 Index (CD20), lost nearly 9% before recovering part of its decline.
Cryptocurrencies have been hurt by risk-off sentiment in broader financial markets amid stagflation in the United States, following indications of slowing growth and persistent inflation that have dampened hopes of an interest rate cut by the Federal Reserve. The Federal Open Market Committee is due to deliver its latest rate decision later in the day.
Ether {{ETH}} fell about 5%, dropping below $3,000, while dogecoin {{DOGE}} led the decline among other major altcoins with a 9% drop. Solana {{SOL}} and Avalanche {{AVAX}} both lost about 6%.
Bitcoin plunged in April, posting its first monthly loss since August. The 16% drop is the worst since November 2022, when cryptocurrency exchange FTX imploded, but some analysts are warning of further declines in the immediate future.
10x Research, a digital asset research firm, said it sees selling pressure toward the $52,000 level due to outflows from U.S. cash exchange-traded funds, which have totaled $540 million since the Bitcoin halving on April 20. It estimates that the average entry price for U.S. Bitcoin ETF holders is $57,300, so this could prove to be a key support level.
The closer the bitcoin spot price is to this average entry price, the greater the likelihood of a new ETF unwind, 10x CEO Markus Thielen wrote Wednesday.
“There may have been a lot of ‘TradeFi’ tourists in crypto – pushing longs all the way to the halving – that period is now over,” he wrote. “We expect more unwinding as the average Bitcoin ETF buyer will be underwater when Bitcoin trades below $57,300. This will likely push prices down to our target levels and cause a -25% to -29% correction from the $73,000 high – hence our $52,000/$55,000 price target over the past three weeks.”
The story continues
UPDATE (May 1, 8:56 UTC): Price updates throughout the process.
UPDATE (May 1, 9:57 UTC): Price updates throughout the process.
UPDATE (May 1, 11:05 UTC): Adds analysis from 10x.
Hello from Austin, where thousands of crypto enthusiasts braved storms and scorching heat to attend Consensus. The industry’s largest and longest-running conference, which can sometimes feel like a religious revival, offers opportunities to chat and listen to leading names in crypto. And for the casual observer, Consensus offers a useful glimpse into the mood of an industry prone to wild swings in fortune.
Unsurprisingly, the mood is noticeably more positive than it was a year ago, when crowds were sparse and many attendees were quietly confiding that they were considering switching to AI. In practice, that means some of the more obnoxious elements are back, but not to the level of Consensus 2018 in New York, when charlatans parked Lamborghinis outside the event and the hallways were lined with booth girls and scammers pitching “ICOs in a box.”
This time around, Elon Musk’s Cybertrucks have replaced Lamborghinis as the vehicle of choice for marketers. One of the most notable publicity stunts was a startup that paid a poor guy to parade around in the Texas sun in a Jamie Dimon costume, wig, and mask, and then staged a mock assault on him by memecoin characters.
Outside the event was a giant “RFK for President” truck, while campaign staffers manned a booth instead — a reflection of both the election year and crypto’s willingness to latch onto any candidate, no matter how outlandish, who will talk about the industry. RFK himself is scheduled to address the conference on Thursday.
Excesses aside, the general sense of optimism was understandable. The cryptocurrency market has not only recovered from the wave of fraud that nearly sank it in 2022, it is riding a new wave of political legitimacy. This month, cryptocurrencies scored once-unthinkable political victories in Washington, D.C., and there is a sense that the industry has not only withstood the relentless regulatory assaults of SEC Chairman Gary Gensler and Sen. Elizabeth Warren, but is poised to defeat them.
And while cryptocurrency is still searching for its flagship application, the optimists I spoke with pointed to signs that it is (once again) upon us. Those signs include the rapid advancement of zero-knowledge proofs as well as the popularity of Coinbase’s Base blockchain and, perhaps most importantly, the large-scale arrival of traditional finance into the world of cryptocurrencies – a development that not only provides a major financial boost, but also a new element of stability and maturity that will, perhaps, tame the worst of crypto’s wilder side. Finally, this consensus marked the end of the Austin era as the conference, under new leadership, will be held in Toronto and Hong Kong in 2025.
The story continues
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
This story was originally featured on Fortune.com
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