Suche
Mein Konto
The Impact of Elon Musk's Tweets on Cryptocurrency Prices: An Analysis
Elon Musk, the CEO of Tesla, has a significant influence on the value of cryptocurrencies, especially on the market Twitter. This became apparent at the beginning of 2021 when he announced that Tesla had bought Bitcoin and that in the future cars could be paid for with this cryptocurrency. This caused the value of Bitcoin to increase by 23 percent. However, a subsequent announcement by Musk in May led to a 16 percent share price loss. Smaller cryptocurrencies such as Dogecoin in particular appear to be heavily influenced by Musk's tweets. Thierry Berger, who researches the topic, says that Musk promotes these so-called “memecoins,” which leads to significant price increases. You could...
The Impact of Elon Musk's Tweets on Cryptocurrency Prices: An Analysis
Elon Musk, the CEO of Tesla, has a significant influence on the value of cryptocurrencies, especially on the market Twitter. This became apparent at the beginning of 2021 when he announced that Tesla had bought Bitcoin and that in the future cars could be paid for with this cryptocurrency. This caused the value of Bitcoin to increase by 23 percent. However, a subsequent announcement by Musk in May led to a 16 percent share price loss.
Smaller cryptocurrencies such as Dogecoin in particular appear to be heavily influenced by Musk's tweets. Thierry Berger, who researches the topic, says that Musk promotes these so-called “memecoins,” which leads to significant price increases. You can therefore make a lot of money with leveraged long positions. However, Berger emphasizes that it is not in the spirit of a market to be so easily manipulated.
But where does Elon Musk get this power? To understand this, you have to take a closer look at the platform. Twitter and Bitcoin have a long history. Hal Finney first mentioned the new cryptocurrency in a tweet in January 2009, thus initiating the exchange of Bitcoin.
Today, Bitcoin is the leading cryptocurrency on the market and Twitter has become one of the most important information platforms for investors in Bitcoin and other cryptocurrencies. Antonius Gress of Blockbrain, an analytics startup, says that much of the opinion-forming among crypto investors takes place on Twitter. The exchange creates the so-called sentiment, i.e. the mood on the stock exchanges, which entices many investors to buy or sell cryptocurrencies.
This works particularly well for small cryptocurrencies with a low value. The more illiquid a coin is, the easier it is for discussions on Twitter etc. to influence the price.
Why do so many crypto fans use social networks like Twitter? According to Thierry Berger, Twitter is not just a platform for crypto fans to search for information and exchange investment tips. The platform also serves to entertain and interact with like-minded people. Especially for those who don't have anyone in their circle who knows about cryptocurrencies, Twitter is an opportunity to feel understood and find like-minded people.
However, most crypto fans not only get information via Twitter, but also use other platforms such as YouTube, Reddit, LinkedIn and possibly soon also Threads, the new offshoot of Meta. All of these platforms compete for users' attention and offer different types of information and discussions. Some information is exchanged publicly, while others are exchanged in closed chat rooms.
Thierry Berger points out that market manipulation through artificially generated hype on social media is a market failure, especially for small market capitalization coins. There are over 26,000 different cryptocurrencies and the hype can lead to price gains that do not correspond to the fundamental properties of the project.
Elon Musk has an immense reach on Twitter with currently 147.8 million followers. However, since Musk's takeover, Twitter has introduced restrictions such as making tweets less visible to non-logged in users and restricting search engines' access to the platform's content. This could be due to Musk’s decisions based on cost.
Despite Musk's influence and reach, experts such as Antonius Gress and Thierry Berger have stressed that he does not have unlimited influence on markets. Investors are getting used to the constant buy and sell signals and are following them less and less. Therefore, even with a large reach, Musk and other people do not have unlimited influence on the markets.