To what extent should investors consider the impact of Musk’s tweets on cryptos?
Bitcoin was created in 2009 and for the next 11 years Elon Musk showed no interest in virtual currency. Then one fine day in early February 2021, he announced that Tesla had purchased coins worth $ 1.5 billion. This helped the cryptocurrency soar, pushing it to all-time highs soon after. This is now called the “Elon Musk” effect on the virtual currency market.
In the first week of October this year, the dogecoin derivative coin Floki Inu jumped 30% after a tweet from Elon Musk. Musk has a dog named Floki, who is a Shiba Inu, a breed of Japanese dog.
This isn’t the first time Elon Musk’s tweet has confused crypto investors.
In March 2021, Musk declared “I am getting a Shiba Inu”. On June 25, he tweeted “My Shiba Inu will be called Floki”. Then on September 12, he tweeted “Floki has arrived” with a photo of his sleeping dog. As a result of these tweets, Floki Inu rose 1000% on September 15.
So, in the space of three days, the currency was multiplied by 10 following Elon Musk’s tweet.
The Musk effect
In February of this year, when Musk announced that Tesla had bought bitcoin worth $ 1.5 billion, the cryptocurrency rose 20% in one day.
On February 4th, he wrote “Dogecoin is the people’s crypto” causing Dogecoin to jump 50% in one day. Overall, Dogecoin has seen a 15,000% jump in one year thanks to a number of Elon Musk’s tweets expressing his support.
In March of this year, Musk announced that Tesla would accept bitcoin payments, after which the currency hit a record high of $ 64,000 the following month.
However, soon after warming up to bitcoins, he announced his aversion before his new love to Floki.
In May, Musk announced that electric car maker Tesla would not accept bitcoin due to environmental concerns. He wrote on Twitter that he was concerned about the rapid increase in the use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of all fuels.
He admitted bitcoin was a good idea, but it can’t cost the environment dearly. Shortly after the tweet, bitcoin fell 10%.
The numero-uno cryptocurrency saw a major correction of 27% after this announcement. Dogecoin also saw a drop of around 20% in the same month.
Since cryptocurrencies are quite volatile, such cryptic remarks, flip flops, and impulse buying add fuel to the fire. A short-term investor can ride the wave to exit the market soon after. But if you want to invest in cryptos for a long time, it is not advisable to buy and sell on a whim.
For example, bitcoin may have hit over $ 64,000 in April, but it was trading at $ 50,000 in October. So if you’ve been in the crypto market for a long time, you can ignore the noise, keep your head down, and wait for the right opportunity to come out.
We can summarize that Elon Musk’s tweets tend to have an impact on the price movement of cryptocurrencies, but buying and selling a currency following the tweet of another investor (even billionaire) does not. is not a rational investment decision.
Category: MintGenie tells you
Did you know Bitcoin jumped almost 20% in one day to an all-time high of $ 46,000 after Elon Musk tweeted in February 2021 that Tesla bought the tokens worth $ 1.5 billion? dollars?
What is the Elon Musk effect on cryptocurrencies?
- Dogecoin has risen 15,000% this year after Musk tweeted about the coin.
- After Musk showed his support for bitcoin through a series of tweets, the digital currency hit an all-time high of $ 64,829 on April 14, 2021.
- Bitcoin fell 10% in May 2021 after Musk tweeted that Tesla would no longer accept bitcoin
- Floki Inu rose 1000% after Musk’s tweets in September 2021.
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