Elon Musk Tweets Pump Dogecoin But Not BTC: Research
3 min read
Since joining the crypto conversation, Tesla CEO Elon Musk has had an outsized influence on market moves. New data, however, suggests that this influence hasn’t always been positive—especially when it comes to BTC.
In their latest report, data aggregator site The Tie and trading platform eToro compared how tweets from Musk and MicroStrategy CEO Michael Saylor have affected the price of BTC and Dogecoin when tweeting about each asset.
The analysis unpacked three phenomena in particular: Average return per tweet, tweet volume per tweet, and investor sentiment following each tweet.
Elon Musk: good for BTC?
Surprisingly, Musk’s tweets about BTC yielded an average negative return of 1.6%. Saylor’s tweets, however, were slightly more bullish, generating an average return of .6%.
BTC is my safe word
— Elon Musk (@elonmusk) December 20, 2020
It would also appear that the Tesla chief has a much stronger influence over Dogecoin. Crypto investors have been privy to Musk’s effects for some time too. In April, he tweeted an abstract painting from Spanish artist Joan Miró and the phrase, “Doge Barking at the Moon.”
The cryptic message pushed Dogecoin to a new high of $0.18 at that time.
Of course, Musk has expressed differing sentiments about Dogecoin and BTC in his tweets. For example, his comments about BTC mining energy exceeding that of medium-sized countries, and his announcement that Tesla would no longer accept BTC for purchases, yielded drops of 11.8% and 13.4%, respectively.
BTC hashing (aka mining) energy usage is starting to exceed that of medium-sized countries. Almost impossible for small hashers to succeed without those massive economies of scale.
— Elon Musk (@elonmusk) May 20, 2021
This is the only stat, though, in which Musk trails Saylor’s social media activity. When examining investor sentiment following BTC tweets, Musk has a much more bullish influence.
How do Musk and Saylor affect sentiment?
The Tie measures sentiment changes using several proprietary algorithms. A tweet that features words like “bullish,” “surge,” or “buying,” for example, would earn a higher investor sentiment score. Conversely, tweets with words like “bearish,” “drop,” or “selling,” would earn a lower investor score. The quality of the poster is also critical; bots are removed, whereas professional investors and traders are kept.
These two charts suggest that Musk generates far more chatter and social media attention than Michael Saylor. In some cases, this chatter has also resulted in serious material gains (or losses).
Musk and Saylor’s impact on BTC
Each CEO commands a huge number of followers on Twitter and thus whenever either Musk or Saylor comments about BTC, they’re sure to spark a conversation throughout the Twitterverse—whether bullish or bearish.
For example, the average number of tweets about BTC or Dogecoin following a comment from either Musk or Saylor is substantial. When Musk tweets about BTC, the number of tweets about the cryptocurrency increases by 44%. Saylor’s contributions move the needle 4.1%.
Combining social media activity from Twitter whales with BTC’s native volatility makes for a heady concoction.
But for those attempting to trade on said tweets, The TIE offers a word of caution.
“While these opportunities can be lucrative, investors should be cautious of trying to ride the back of the tweets as more often than not, the price of BTC and DOGE have retraced after their tweet fuel pumps,” the report concluded.
