The Musk Effect
Elon Musk, the Tesla & SpaceX CEO, has the ability to drive the crypto market with just one tweet.
Elon Musk, Tesla chief and founder of SpaceX has been tracked by crypto users more than any person in the world today. What he tweets and speaks about cryptocurrency is always looked at closely by all crypto users across the globe.
The crypto market fluctuates upward and downward based on Musk's utterances. Research into Musk's activities is also gaining momentum.
Musk is extremely active on the social networking site, twitter.com, where he has close to 65 million followers.
In January 2021, a tweet of Musk pushed Bitcoin price to $38,000, an increase of $6000, which added $111 billion to Bitcoin's market capitalization. Musk only added #bitcoin to its account description.
Lennart Ante, co-founder of the non-profit research institute Blockchain Research Lab which has been researching all Musk’s crypto activities writes,
"The change of Musk’s Twitter bio to #bitcoin and the tweet “One word: Doge” stand out. In the first case, the significant abnormal return of Bitcoin amounted to 6.31% over a time window of 30 minutes from the event. It grew to 18.99% over a period of four hours. Regarding the Dogecoin tweet, the abnormal return was 8.16% after only five minutes and peaked after sixty minutes (17.31%)."
On 8 February 2021, Tesla revealed that it has purchased $1.5 billion worth of Bitcoin from the market, and March announced that it will accept Bitcoin for booking Tesla cars. However, in less than two months, Musk posted a tweet in May stating that Tesla will no longer accept Bitcoin as a mode of payment. Musk cited climate change as the main reason behind the company's decision to discontinue accepting the cryptocurrency.
Ante studied five other tweets from 2020 to 2021 in which Elon Musk commented on cryptocurrencies. These included the publication of a photo with reference to the cryptocurrency Dogecoin; a tweet that included the Dogecoin symbol; a tweet about Dogecoin: “One word: Doge”; the tweet “Bitcoin is my safe word” as well as the tweet “Bitcoin is almost as bs as fiat money” and finally; and a tweet showing a photo of how a “Dogecoin standard” is overrunning the global financial system.
Many researchers have coined the word 'Musk Effect' because his activities have an impact on the prices of crypto or stock on which he tweets. Musk's tweet not only propels Bitcoin but also other crypto projects.
Musk's 25 June 2021 tweet on Floki, an alternative to Dogecoin, propelled the prices of Floki tokens. Not only doge memes, but he has also been warming other meme tokens too. On 18 October 2021, he shared a cryptic message featuring the word “bunny” in his tweet.
Token prices of Bunny Park, Pancake Bunny, Little Angry Bunny V2, Rewards Bunny project gained a lot in value. The price for BunnyRocket has seen gains of over 88.1% on the day, while the price of Rocket Bunny has increased by 252.1% on the day of the tweet.
Recently, Musk briefly changed its profile to Lorde Edge, the prices of Lorde Edge EDGELON ($EDC), a DeFi cryptocurrency token skyrocketed and daily trading volumes were over $5 million for the next few days.
Dogecoin co-founder Billy Markus, who is on Twitter as Shibetoshi Nakamoto suggested that 'Lorde Edge' is an anagram for Elder Doge.
While companies across the globe gasped during the pandemic, Musk’s portfolio only grew stronger, and when he was named the richest person on the planet in early 2021, he had added more than $150 billion to his wealth in just one year.
In July 2021, he openly said that if the price of Bitcoin goes down, he too suffers and acknowledges that he owns Bitcoin, Ethereum, and Dogecoin in its portfolio.
Not only crypto projects but there are also numerous other examples to assert the power of the ‘Musk Effect’ including the incident of e-commerce company Etsy witnessing a surge in its stock price when Musk just tweeted, ‘I kinda like Etsy.’
Another example is the support of messaging app Signal amid the controversial data policy of Whatsapp. His two-word ‘Use Signal’ endorsement boosted the app’s downloads overnight.
Musk does understand what he is tweeting, he never says anything without a purpose, there is always a reason behind his tweet. Users who follow him, take his message seriously and act Kleverly.
It is always a Klever idea to tweet with a purpose!
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Disclaimer: This article is only for educational purposes, it is not investment or financial advice on cryptocurrencies.