The recent price surges for Bitcoin (BTC) and meme-friendly Dogecoin (DOGE) triggered by Elon Musk has now become the topic of research for the recently published Blockchain Research Lab paper aptly titled: “How Elon Musk’s Twitter activity moves cryptocurrency markets.” The January 3rd published paper explicitly highlights the six different instances that Elon Musk significantly affected the crypto market and its overall landscape just by a simple tweet.
As per a researcher involved in the particular paper, Lennart Ante, they have quickly identified highly significant irregular crypto trading volume following each of the six most recent crypto-related Twitter posts made by Musk. The researcher adds that they have observed abnormal returns reaching up to 18.99% and 17.31% for Bitcoin and Dogecoin, respectively, simultaneous with some of the said tweets.
The paper states that among the six studied recent Musk tweets that seemingly significantly affected the crypto space, four of them are most likely to be only reactions to prior market events and are not primarily driven by Musk’s online influence. However, the other two are a different matter of discussion altogether, as both observably resulted in drastic trading volume increases and significant positive irregular returns.
The first instance is when Musk simply added the word “#bitcoin” to his Twitter profile this past January 29th. Reports at that time indicate that the price of BTC surged drastically mere minutes following Musk’s Twitter profile addition – climbing as much as 20% in the hours that followed. The other was back in December, wherein he nonchalantly tweeted: “One word: Doge.” Prior to that particular tweet, DOGE was only trading about nine times per minute at an average trading volume of $1,940. Within the following half-hour from when Musk posted the tweet, however, DOGE sold 775 times per minute, with its trading volume jumping wildly to $299,360. Needless to say, Musk’s influence on the crypto market is indeed a thing for concern.
However, as impressive as his ability to dictate crypto movements may be, there will still be consequences. Ante emphasized that the study results led the researchers to believe that if a single tweet can have the capacity to increase BTC’s market cap to $111 billion, an inverse of it could potentially happen – one simple tweet could also wipeout billions as well.
To his credit, Musk seemingly recognizes the power his influence has over the crypto market, evidenced by the many instances wherein he chose to be careful with his words, omitting to comment on cryptos other than BTC and DOGE.