Why does Elon Musk influence the crypto market?

Elon Musk has become known to any individual remotely aware of cryptocurrency. With over 55 Million supporters, the CEO of Tesla, SpaceX and The Boring Company appears to be shaking the crypto world with his witty tweets. His relationship with cryptocurrencies has been a complex one. To begin with, he adored them, and after that he embraced them, now he thinks they’re bad for the environment. Every time he tweets about cryptocurrencies, the market appears to respond. As a consequence of these tweets, CoinSwitch Kuber expressed that there’s usually a surge in their trade volumes. Elon Musk’s tweets are known for his statements on cryptocurrency. He has amassed a significant fanbase within the crypto community utilizing Twitter.

History of Musk’s tweets and market reaction

In April, Tesla sold 10% of its Bitcoin property, causing panic among financial specialists. Elon reacted to this with a tweet expressing that Tesla sold Bitcoin as it were to test its liquidity and he still holds Bitcoin. Not long after this, Elon Musk broke the hearts of numerous investors with tweets that appeared to question the environmental footprint of the asset. He sent a tweet that said Tesla would not be accepting payments in Bitcoin owing to the high energy consumption during its mining process. This choice sent cryptocurrencies into a descending status, and Bitcoin fell below $30,000. He kept experimenting with crypto and a week after he used Twitter to indicate his support for miners making their processes greener. After these tweets, Bitcoin bounced 19% to around $39,950.

Elon Musk and meme coins

In February 2021, Dogecoin – the meme cryptocurrency – continued to capture public attention as Tesla CEO Elon Musk and rapper Snoop Dogg sent out a great deal of tweets, driving up the price of the meme coin. Following the series of tweets, Dogecoin leaped 31% to a record high value of $0.083745. It ranked as one of the Top 10 digital coins by market capitalization. The Tesla CEO didn’t leave DOGE there. He continued putting the emphasis on the meme coin whenever he got a chance – numerous tweets, some TV shows (like SNL), interviews and so on… This effort resulted in months after months of all-time highs and broken records. Eventually Dogecoin became one of the Top 5 cryptocurrencies with a market cap of $74 billion and price for one coin of $0.74.

Elon Musk and his tweets were also predominantly responsible for the huge Shiba Inu coin pump of around 400% in October 2021. The meme coin’s price exploded, putting it in Top 20 of the biggest cryptocurrencies by market cap. Moreover, Shiba Inu became one of the most searched terms in Google.

Is Elon Musk predominantly responsible for big market crashes?

The short answer is no. They only strengthen ongoing processes! Elon Musk has the control to slightly move the crypto markets with his tweets or opinion (5%-10%). A more profound look into the working of crypto as an investment proposes an investigation into the price cycle of any asset into four stages – Accumulation, Markup, Distribution and Markdown. This normal cycle that any investment experiences is crucial for its development in the long run. When the crypto market picked up towards the end of 2020, it went through the amassing stage, where numerous speculators entered the market. Towards mid-February 2021, the cash stamped up and settled at an all-time high of $60,000. The distribution stage started when the RSI indicator appeared that the asset was overbought, gradually activating a markdown. The meltdown within the cryptocurrencies has in fact taken a toll on investor opinion and emotions.