The influence of Elon Musk's tweets on the course of cryptocurrencies: an analysis

The influence of Elon Musk's tweets on the course of cryptocurrencies: an analysis

Elon Musk, the CEO of Tesla, has a significant impact on the value of cryptocurrencies, especially on the market titter. This was shown in early 2021 when he announced that Tesla Bitcoin had bought and cars can be paid for in the future with this cryptocurrency. As a result, the value of Bitcoin increased by 23 percent. However, a later announcement by Musk led to a price loss of 16 percent in May

Particularly smaller cryptocurrencies such as Dogecoin seem to be strongly influenced by Musk's tweets. Thierry Berger, who is researching this topic, says that Musk promotes these so -called "Memecoins", which leads to significant price increases. You could therefore earn a lot of money with lit long positions. However, Berger emphasizes that it is not in the interests of a market to be so easy to manipulate.

But where does Elon Musk take this power from? To understand that, you have to take a closer look at the platform. Twitter and Bitcoin have a long history. Already in January 2009 Hal Finney mentioned the new cryptocurrency in a tweet and thus initiated the exchange via Bitcoin.

Nowadays, Bitcoin is the leading cryptocurrency on the market and Twitter has developed into one of the most important information platforms for investors: inside of Bitcoin and other cryptocurrencies. Antonius Gress von Blockbrain, an analysis startup, says that a large part of the formation of opinion under crypto investors: inside takes place on Twitter. The exchange creates the so -called sentiment, i.e. the mood on the stock exchanges, which many investors: Inside, to buy or sell cryptocurrencies.

This works very well, especially for small cryptocurrencies with low value. The illiquid a coin is, the easier discussions on Twitter and Co. could influence the course.

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 entertainment and interaction with like -minded people. Especially for those who have no one in their circle of acquaintances who are familiar with cryptocurrencies, Twitter is a way to feel understood and find like -minded people.

However, most crypto fans not only inform themselves about Twitter, but also use other platforms such as YouTube, Reddit, LinkedIn and possibly soon threads, the new offshoot of Meta. All of these platforms compete for the attention of the users and offer different types of information and discussions. Some information is exchanged in public, others in closed chat rooms.

Thierry Berger points out that market manipulations by artificially generated hype on social media are a market failure, especially for coins with low market capitalization. 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 range on Twitter with currently 147.8 million followers. However, Twitter has introduced restrictions since Musk's takeover, such as less visible tweets for non -registered users and restricted access of search engines to the content of the platform. This could be due to Musk's decisions for cost reasons.

Despite Musk's influence and reach, experts like Antonius Gress and Thierry Berger emphasize that he has no unlimited influence on the markets. The investors: Inside, get used to the constant purchase and sales signals and follow them less and less. Therefore, Musk and other people have no unlimited influence on the markets even with a large reach.