Elon Musk’s tweets about Bitcoin and Dogecoin caused a rally of nearly 20% for both currencies, according to to study Conducted by the Blockchain Research Lab.

The CEO of SpaceX has around 45 million followers on Twitter.

On January 29, when Musk updated his Twitter bio and changed it to Bitcoin, he launched a new trend that saw many YouTube and Twitter celebrities like him act.

Since then, much has been speculated about whether Musk’s tweets can really affect the cryptocurrency markets.

But now jl is releasing a study confirming that it really can.

Lennart Ante, a researcher at the Blockchain Research Laboratory, said:

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Based on six recent cryptocurrency-related activities on Twitter, we determine an extremely high abnormal trading volume after each tweet from Elon Musk.

We also detect significantly abnormal returns of 18.99% for Bitcoin and 17.31% for “Dogecoin” across different time frames.

With strength comes responsibility:

Elon Musk’s ability to influence the movement of cryptocurrency has consequences.

Ante said:

If one tweet could lead to a $111 billion increase in Bitcoin’s market cap, a different tweet could also wipe out a similar value.

But this is the nature of cryptocurrency

Crypto projects are designed to be decentralized and controlled by the public, not governments.

So the fact that the average citizen can influence the price of cryptocurrency may not be that important.

And Ante added:

People have the right to think about that, and they will still think about that especially in the event of financial profits or losses.

Study of Elon Musk’s tweets:

The study looked at six events linked to either Bitcoin or Dogecoin.

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Regarding bitcoin, the most important notes centered on January 29, 2021, when Musk updated his Twitter bio and converted it to the term bitcoin and tweeted the following:

Later, it is inevitable

For Dogecoin, the study looked at tweets going back to July 2020, but again the most important note looked at a combined tweet and update posted on December 20, 2020.

On that day, Musk tweeted the following:

One word: “Dogecoin”

He also updated his biography to the former CEO of “Dogecoin”.

To ensure that the study only captured the market movements that Musk’s tweets were responsible for influencing, Ante compared market movements observed before Musk’s tweets over the nine hours before them.

Then compare these numbers to actual market movements that occurred around Musk’s tweets themselves.

The difference between these numbers gave “Ante” isolated and objective numbers that can be traced back to the effect of “Mask” tweets.

How did Elon Musk pump the price of bitcoin?

When Musk changed his bio to bitcoin, he not only set a trend in the next movement of bitcoin but also influenced many other popular accounts who updated their bios as well, bringing bitcoin back around 20%.

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After Musk changed his Twitter bio, Bitcoin surged 6% after 30 minutes.

The rate doubled to 13% per hour, peaking at 19% in seven hours.

Ante commented on this effect by saying:

They do not appear to be reactions but rather independent actions that lead to massive increases in trading volumes and significant positive abnormal returns.

At the time of Musk’s update to his Twitter account, Binance was overwhelmed with requests.

CZ, the CEO of Binance, has speculated that Musk may have been the cause of the increased demand, but it cannot be said for certain.

How did Elon Musk pump the price of Dogecoin?

Musk tweeted about “Dogecoin” on several occasions, but the most prominent example in which the currency benefited from his tweets was on December 20, 2020.

On that day, Musk tweeted the following:

One word: Doug.

He also changed his resume that day to the former CEO of Dogecoin.

This tweet alone resulted in the coin gaining 8% in just five minutes, according to researcher Ante.

After an hour, this effect peaked at 17%.

Recently, Musk also made a series of tweets about Dogecoin, but it seems that the effect is weaker than it was earlier, as the currency did not rise as much as it was in the past.

However, the effect is still there.

Read also:

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Learn about Dogecoin, which has turned from a joke to a widespread digital currency