Tesla CEO Elon Musk’s foray into Twitter has had widespread consequences on the stock market since forever, recently the technocrat has created ripples in the market after tweeting “Dogecoin is the people’s crypto”.
Dogecoin is the people’s crypto
— Elon Musk (@elonmusk) February 4, 2021
A significant stock price surge to the tunes of 59% was observed as Dogecoin jumped to $0.05798 as indicated by reports on Crypto news aggregator website Coindesk. Dogecoin has taken leaps through the start of 2021 as the coin currently enjoys a 800% year-to-date appreciation.
Musk’s twitter activity has recently created turbulence in the market during the $GME price volatility, helping Reddit’s WallStreetBets by including a link to the reddit forum quoting “GameStonk!!”. Later that month Elon brought attention to the online handmade goods marketplace Etsy after he quoted “Kinda loves” the handmade goods marketplace.
This however is not the first time that Elon Musk’s twitter activity has caused a disruption on the crypto market. On 29th January, Musk changed the bio of his Twitter to #bitcoin which resulted in an instant increment of Bitcoin stock prices from $32,000 to $38,000 increasing its market cap by $111 billion. To further illustrate the effect Musk’s twitter activity generates we can refer to this tabulation depicting return, volume, price, and number of events after one such post on twitter by Elon-
A study published by The Blockchain Reseach Lab. has computed certain outcomes pertaining to the co-relation between such social media activity and associated market price changes has found that-
a) Musk’s Twitter bio change to #bitcoin resulted in significant CAR of 6.31% over 30 minutes which increased to 13.19% over one hour peaking out at 18.99% over a 7 hour window.
b) Another tweet, this time stating One word: Doge caused a CAR of 8.17% over a period of five minutes which peaked at 17.31% over an one hour window.
However, as per Musk’s own admission the tweet concerning Dogecoin was a joke and that signifies the tremendous influence held by individuals like Musk on the social media. This drives home the point regarding the importance of exercising caution and care while investing and doing your own due market research.