A new study is shining light on the link between Elon Musk tweets and the ebb and flow of the crypto markets.
The study from Blockchain Research Lab (BRL) analyzes six Bitcoin and Dogecoin-related tweets from the billionaire tech entrepreneur.
[adinserter block="1"]The results show that Musk’s tweets can have an immediate and pronounced impact on the industry.
The key to how large the impact of each tweet will be, according to the research, depends on whether Musk is reacting to activity that is already happening in the market or if he is independently sharing a thought out of the blue.
When his crypto-related twitter activity is not connected to previous market activity, the impact is much more significant. For example, within three hours after his bio change to Bitcoin, the price per share increased from over $32,000 to over $38,000. This resulted in a spike of cumulative abnormal return(CAR) of 18.99% within 7 hours.
Similarly, Musk’s tweet of just the word – Doge – resulted in an increase of average trading volume from about 9 trades per minute to 775 trades per minute within 30 minutes.
“The presented results show that individual tweets can have a significant influence on returns and trading volumes of cryptocurrencies…
While Elon Musk is likely to be an extreme example in terms of influence via social media, there is a huge number of comparatively less influential individuals, groups or companies who communicate their opinions on cryptocurrencies via social media. A systematic classification of influencers in terms of their short-term impact on cryptocurrencies may represent a promising research approach.”
According to BRL researchers, four other tweets analyzed in the study were likely reactions to previous market activity and therefore did not yield such significant results.
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