Musk buys Twitter: influence on the crypto market?

Elon Musk, the founder of SpaceX and Tesla, bought Twitter for $44 billion and took over as CEO. The Dogecoin cryptocurrency’s market value surged by $10 billion. Simultaneously, the Shiba rate has risen by more than 100% since Friday.

One of the significant uncertainties is how the Twitter deal will affect the cryptocurrency industry. Elon Musk is a so-called crypto trendsetter and is recognized for pushing some crypto projects. The cryptocurrency market is marked by extreme volatility, which is impacted by various factors.

Context

The recent surge of DOGE is because the rest of the cryptocurrency market is declining. Bitcoin and Ethereum are still more than 70% off their all-time highs, while DOGE, despite its recent surge, is still down 78% from its all-time highs. Dogecoin is now the 8th most valuable cryptocurrency, with a market value of $18.5 billion. Learn more about Dogecoin by visiting the bit4you Academy.

The influence of Elon Musk on the crypto industry

Cryptocurrencies have proven to be sensitive to Elon Musk’s tweets; one of his words may cause rates to drop or surge.

The price of DOGE fluctuates in response to Elon Musk’s statements, and the stock is up 10% in the previous 24 hours after the SpaceX CEO updated his Twitter bio to “Chief of Twit,” according to CNBC.

Similarly, the cryptocurrency skyrocketed in April, when Musk initially proposed accepting Dogecoin as payment for a Twitter membership. There was also a sale in June, when Musk attempted to reject acquiring Twitter.

Previously, Elon Musk stated that he would continue to support Dogecoin (DOGE) in any manner he could, despite a lawsuit for more than $250 million and a 90% drop in DOGE from its high in April.

Monopoly on influence

“Elon’s dominance [on the cryptocurrency market] will not stay forever,” Vitalik Buterin told CNN in a May 2021 interview. Musk’s tweets first appeared in the cryptocurrency arena in 2020, according to him. Vitalik Buterin believes that markets will adapt to his influence in the future.

“Elon Musk is well aware of the market impact of his posts. They directly benefit him and Tesla while having disastrous implications for individual investors,” according to Shirley Valge, COO of Velas Network AG.

How do social networks affect the crypto field?

Social networks have become well-established in today’s culture and affect cryptocurrency rates. The point is that socials drive customers’ perceptions about cryptos. If that impression is attractive, prices rise. However, if the coin receives negative feedback, prices may decline.

In other words, social media can have an impact on investor sentiment. Consider the volatility of cryptocurrencies and the popularity of social platforms such as Facebook, Instagram, Twitter, and TikTok to comprehend the influence social platforms may have on the minds of customers.

However, some experts believe that the world will soon see more crypto influencers, including politicians, making remarks that may cause volatility in digital assets. Likely, the government may implement regulations to avoid market manipulation in the future.