Study examines Elon Musk’s influence on bitcoin price and Dogecoin

Do Elon Musk’s crypto tweets have a big impact on the markets? A study analysed the billionaire’s influence on Bitcoin (BTC) and Dogecoin (DOGE).

A new study sheds light on the connection between Elon Musk’s tweets and price fluctuations on the crypto market. In the process, we all know that Dogecoin and Bitcoin in Crypto Engine particular have caught the attention of the richest man in the world. Only on 29.01.21 he changed his Twitter bio to „Bitcoin“ and only yesterday he tweeted again about Dogecoin.

Not necessarily to everyone’s delight, as the resulting pump for the cryptocurrency is often short-lived. This was the response of one of Elon’s 45.5 million Twitter followers:

But do Elon’s tweets actually move the markets?

Elon’s tweets and their effect on Bitcoin and Dogecoin

Blockchain Research Lab’s (BRL) study analyses six Bitcoin and Dogecoin-related tweets from the billionaire tech entrepreneur. The results show that Musk’s tweets can have an immediate and pronounced impact on the industry.

According to the study, how big an impact each tweet has depends on whether Musk is responding to activity already taking place in the market, or whether he is independently sharing a thought out of the blue.

If his crypto-related Twitter activity is not linked to prior market activity, the impact is much more significant. For example, within three hours of his bio change to Bitcoin (BTC), the Bitcoin price rose from over $32,000 to over $38,000. This led to a price rally of 18.99% in just 7 hours.

Similarly, Musk’s tweet of just the word „doge“ led to an increase in average trading volume from about 9 trades per minute to 775 trades per minute within 30 minutes. In the report, the analysts therefore conclude:

‚The results presented show that individual tweets can have a significant impact on cryptocurrency returns and trading volume.‘

They go on to write about the influence of social media and influencers:

While Elon Musk is probably an extreme example in terms of influence via social media, there are a large number of comparatively less influential individuals, groups or companies who communicate their opinions about cryptocurrencies via social media. A systematic classification of influencers in terms of their short-term influence on cryptocurrencies could be a promising research approach.

According to the BRL analysts, four other tweets analysed in the study were likely reactions to previous market activity and therefore did not provide as significant results.