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How Elon Musk's Tweets Influence Crypto Markets

How Elon Musk's Tweets Influence Crypto Markets

There is no doubt that (Bloomberg) When Elon Musk first claimed his Twitter deal was "temporarily on hold," he sent the social media platform giant into a tailspin. Then, he said he was "still committed."

Initially, the billionaire tweeted that the $44 billion deal was on hold until he received more information about the percentage of fake accounts on the social media site, which sent Twitter stock plunging up to 25 percent in premarket trading. After a few hours, he tweeted that he was "still committed" to the agreement. In New York, Twitter's shares recouped some of their losses and ended the day 9.7 percent down than they had started.

Musk said he was awaiting information from Twitter about a recent filing that claimed that fake Twitter accounts accounted for less than 5% of the platform's users. On Friday night, he tweeted that his team would conduct a random sample of 100 of his followers to see if there was any correlation.

There were "fewer than 5% of our monthly daily active users in the first quarter of 2022 who were false or spam accounts," Twitter stated in its latest results. It has been included in Twitter's quarterly reports for nearly a decade, but this is the first time it has been removed. According to Twitter, its latest estimate was based on "significant judgment" and the true number could be higher.

Even though Twitter CEO Parag Agrawal expected the deal to close, the company needed to be "prepared for all scenarios," he said in a series of tweets a few hours later.

“Nobody at Twitter — including me — will use the deal as an excuse to avoid making critical decisions for our company's future,” Agrawal declared.

As part of his efforts to reform Twitter, Elon Musk has focused on eliminating fake accounts. As part of his deal to acquire it, he stated his desire to defeat spam bots, authenticate all humans, and make its algorithms open source in a statement released last month. Tesla CEO Elon Musk has also stated that he wants to make the platform a bastion of free speech by removing the controls on what can be said there.

For Elon Musk's takeover of Twitter, Binance has contributed $500 million in equity investment. If Musk succeeds in taking the social media company private, the world's largest crypto exchange would acquire a stake in the company.

Among the backers of Tesla CEO Elon Musk's TSLA +5.71 percent (TSLA) offer are Binance, Larry Ellison, the co-founder of Oracle (ORCL), Sequoia Capital, and the asset management firms Brookfield and Fidelity. The group includes investors from Saudi Arabia, Qatar, and Dubai.

As Binance CEO and co-founder Changpeng Zhao (aka CZ) told Barron's in an email statement, "We're pleased to be able to assist Elon realize a new vision for Twitter." In order to promote the use and adoption of crypto and blockchain technologies, "We aim to be able to play a part in bringing together social media and web3."

Relation with Crypto Market

The price of dogecoin surged as much as 50 percent after a single tweet from Tesla and SpaceX creator Elon Musk. For a while, it appeared like the price of bitcoin was heavily influenced by the views of the world's richest man.

Musk's statement suggesting Tesla will accept DOGE for goods saw the meme coin skyrocketing by 43 percent on Tuesday, offering a sense of déjà vu.

When it comes to influencing the cryptocurrency market, Tesla CEO Elon Musk isn't the only one. Meme currencies and NFTs, for example, have shown a high level of receptivity to celebrity shilling.

The correlation between dogecoin's growth and Musk's praise is clear, notwithstanding the difficulty of measuring the exact influence of a single event on the market. In the midst of other billionaires (Mark Cuban included) and celebrities jumping on the DOGE bandwagon, Musk was often the most vocal in his attempts at memeing the canine money "to the moon."

Top 3 tweets from Tesla CEO Elon Musk:

When he tweeted about his admiration for DOGE on Feb. 4, the price jumped over 10% in an hour and more than 50% in a day.

You can now buy a Tesla with bitcoin. That's right. Large organizations embracing BTC helped the asset reach new heights, and BTC would hit nearly $65,000 a month after the tweet in terms of value.

The price of DOGE surged 43 percent within two hours of Tesla CEO Elon Musk announcing that the company would begin taking DOGE as payment for items on Dec. 14.

Tesla's influence on bitcoin's price throughout the spring was significant, thanks in part to Musk's involvement. Volatility in crypto assets was exacerbated by Tesla's disclosure of its BTC purchase, acceptance as a form of payment for Tesla products, and subsequent sale of certain BTC holdings.