In reality, the phenomenon of social media influence on financial markets began to be closely studied as early as 2018. It was discovered then that certain comments and posts on social media can indeed impact the price of cryptocurrencies. Furthermore, statements made by prominent media figures are almost always accompanied by a surge in activity.
Musk's favorite coin
But why Dogecoin specifically? The CEO of Tesla and SpaceX actively mentioned Dogecoin on his Twitter account as early as 2019, and almost after each of his tweets, the price of the altcoin would rise.
"Dogecoin might be my fav cryptocurrency," tweeted Elon Musk back in April 2019.
From that moment on, Musk's fate became intertwined with the fate of the playful token. Throughout 2020, he continued to periodically mention the project, but it didn't yield any noticeable results. However, in 2021, the billionaire adopted a more aggressive tactic of promoting the cryptocurrency.
In retrospect, it was inevitable," wrote Musk on his Twitter on January 29, 2021, and added the hashtag #bitcoin to his profile description.
This hint proved to be enough for investors—the price of bitcoin instantly soared by 20%. Shortly after, at the beginning of February, he posted a photo of the Falcon 9 rocket in flight with the caption "Doge."
In less than an hour, the price of Dogecoin increased by 47%!
Throughout 2021, amidst the bullish rally in the crypto market, Elon continued to support various tokens. In July 2021, at the "The B Word" crypto conference, Elon Musk announced that he holds Bitcoin, Dogecoin, and Ethereum in his wallet. The reaction was swift, and the projects noticeably increased in price.
The playful coin's PR campaign throughout the past year led to Dogecoin surpassing Bitcoin in the number of Google search queries in 2021.
Why can Elon Musk influence the market?
It is quite natural for the billionaire's tweets to have such an impact on investors, as he is considered one of the wealthiest individuals on the planet (occasionally swapping places with Jeff Bezos at the top of the Forbes list) and currently has over 113.4 million followers on Twitter. Moreover, the IT community perceives him as some sort of oracle capable of sharing wisdom, having multiplied his investments through the development of fintech projects.
According to research conducted by various research groups, approximately 40% of investors in the United States have at least once made investments based solely on Elon Musk's statements. His audience trusts the billionaire, who exploits the image of being "the guy" in the world of big money.
However, his influence on the crypto market is not limited to just social media posts and bold statements during TV broadcasts.
In early 2021, Tesla invested $1.5 billion in BTC and announced plans to accept Bitcoin as payment for its electric cars. Just eight days after the announcement, Bitcoin reached a record high of $50,000.
This was followed by a series of positive tweets from Musk about Bitcoin and Dogecoin. The prices of the cryptocurrencies steadily rose due to various factors, but thanks to Musk, this organic growth accelerated significantly, ultimately resulting in both cryptocurrencies setting new price records.
Is Elon a dog lover?
But in reality, the "Elon Musk Phenomenon" lies not so much in his ability to directly influence stock quotes and cryptocurrency prices through his statements but in his ability to create entire communities of fans who enrich themselves by joining the billionaire's brand.
For example, in the fall of 2021, Elon Musk announced on Twitter that he had bought a Shiba Inu dog and named it Floki. The crypto community responded by almost instantly creating similarly named parasitic tokens.
In the end, this phenomenon has led to the creation of dozens of "dog" tokens that gain their share of fame from any mention of Elon Musk in the information field. Without even having any direct connection to the billionaire's persona, some tokens manage to show remarkable results simply due to their existence in the overall context.
After the recent completion of the Twitter acquisition deal by Elon Musk:
- Shiba Inu token (named after Musk's dog breed) increased in price by 30%.
- Dogelon Mars token (named after the dream of Mars colonization) rose by 90%.
- Floki token (named after Musk's dog's name) rose by 76%.
- Akita Inu token (here we ran out of explanations, named simply after the dog breed) increased by 36% during last week's rally.
As we have already seen, media personalities, especially the flamboyant Elon Musk, noticeably influence the cryptocurrency market.
Currently, the market is in a state of significant uncertainty: "the end of crypto winter" or "a bull trap"?
But celebrity statements make the market increase the volatility of tokens even in such uncertain conditions, as previously confirmed by the financial results. After Musk became the owner of Twitter, he continues to demonstrate active engagement on the platform, including participating in dialogues with the crypto community.
For example, on November 2nd, he left a meaningful comment under a question about whether he plans to integrate Dogecoin into Twitter's services. Despite the lack of specifics, the crypto community actively discusses this concise tweet.
In addition to the obvious impact of Elon Musk, Dogecoin has a fairly strong community. And some investors (like us) are still waiting for the promised launch of the token to the moon - the Doge-1 satellite, which was fully financed by Dogecoin tokens and should eventually be sent to lunar orbit.
However, it is worth remembering that the high susceptibility to the statements of just one person can contribute not only to driving up prices but also to a decline, even to the complete destruction of the project.
This information is not intended as individual investment advice, and the financial instruments or operations mentioned in it may not correspond to your investment profile, investment goals, and expectations. Determining the suitability of a financial instrument or operation for your interests, investment goals, investment horizon, and level of acceptable risk is a personal task for each investor.