While it may seem like the prices of cryptocurrencies are driven by somewhat random market forces, memes and trader mentality, there’s one person who regularly demonstrates a seemingly outsized influence on cryptocurrency markets: Elon Musk.
If you could somehow get a crystal ball that gave you a glimpse of Elon Musk’s Twitter feed, you would have a near-certain path to riches. When Musk says something good about Bitcoin, Dogecoin or any other cryptocurrency, the price seems to go up right away. On the contrary, a negative or cryptic note by Musk could send prices plummeting in an instant. Here’s a more detailed look at why Elon Musk’s Twitter affects the price of cryptocurrency.
An Unfiltered Look Into the Billionaire’s Mindset
Elon Musk regularly takes to Twitter to air his thoughts, hopes and grievances about everything in the world, from his company’s stock price to the future of humanity. But one topic he comes back to again and again is cryptocurrency, notably Bitcoin and Dogecoin.
Musk often uses Twitter to make new announcements related to his companies, pushing the price of cryptocurrencies up or down. For example, Musk drove up the price of Bitcoin with a Tweet sharing that Tesla would accept Bitcoin as a form of payment:
But not long after, Musk drove down the price of Bitcoin with a Tweet about its power consumption and Tesla’s suspension of taking Bitcoin as a payment method:
Musk rarely holds back on his opinions and plans, which has led to trouble with the Securities and Exchange Commission. But that doesn’t seem to hold him back from regularly discussing cryptocurrencies, where he doesn’t hold the same type of insider knowledge as his own company stock.
Musk Is Highly Respected by the Cryptocurrency Community
As a highly successful founder involved in PayPal, Tesla, SpaceX, The Boring Company and Neuralink, Musk has a reputation for building forward-thinking futuristic businesses. Some may go as far as to consider him a modern Thomas Edison. So when he talks about the future of money and currency, many people listen.
Even more, Musk has earned a cult-like following online due to his antics and unfiltered opinions. He’s appeared on “The Joe Rogan Experience,” a podcast where he captured notoriety for joining Rogan in smoking cannabis on the show.
Regardless of a little mischief, Musk has a serious following on Twitter. As of this writing, 57.7 million accounts follow every Musk Tweet, myself included. (I also Tweet about crypto but don’t have the same market-moving power as Musk.) Perhaps the peak of his crypto “Dogefather” status came about when he appeared on “Saturday Night Live” and discussed Dogecoin.
While many thought Musk’s SNL appearance would send Dogecoin’s price “to the moon,” it fell flat during and after his big hosting gig.
Should Twitter Be a Part of Your Crypto Strategy?
Cryptocurrencies can act as a way to diversify your portfolio as the digital economy moves into the future, and crypto values can double, or more, in a short period. However, cryptocurrencies are extremely volatile and risky, and there’s no guarantee they won’t become completely worthless in the future. That’s why you should proceed with caution when investing in anything that’s so heavily influenced by one man’s Twitter account.