To the Moon or Sun… the Elon Tweets that affected global crypto prices…
How Elon Musk’s Twitter activity moves cryptocurrency markets..?
On January 29, 2021, Elon Musk, at that time richest person in the world (Klebnikov, 2021),
unexpectedly changed the bio1 of his Twitter account to #bitcoin. The price of Bitcoin rose
from about $32,000 to over $38,000 in a matter of hours, increasing its market capitalization
by $111 billion.
The relevance of Musk’s tweets for financial markets has already become apparent in other
contexts. His tweet “considering taking Tesla private at $420” (Musk, 2018) resulted in a fraud
charge and a penalty of $40 million (U.S. Securities and Exchange Commission, 2018). Musk’s
endorsement of the encrypted messaging service Signal (Musk, 2021a) led to investors
purchasing the unrelated Signal Advance stock, increasing the latter’s market valuation from
$55 million to over $3 billion (DeCambre, 2021)
In a recent talk on social media platform Clubhouse, Musk stated that Bitcoin is “on the verge
of getting broad acceptance” and disclosed that he is “late to the party but […] a supporter of
Bitcoin” (Krishnan et al., 2021). This is in line with a tweet from May 2020 where Musk
admitted to “only own[ing] 0.25 Bitcoins” (Musk, 2020a). In the talk, he claimed that his tweets
about the cryptocurrency Dogecoin are only jokes (Krishnan et al., 2021). Regardless of
whether they are meant in jest or in earnest, Musk’s tweets seem to have an impact on the
cryptocurrency market. Therefore, it is of interest to gain an understanding of the extent to
which these tweets resulted in short-term changes of price or trading volume. We conduct an
event study to investigate six Twitter events where Musk referred to cryptocurrency—
specifically Bitcoin or Dogecoin—and analyze to what extent these events affected return and
trading volume of the corresponding cryptocurrency in the following minutes and hours.
Table 1. Six cryptocurrency-related events on Elon Musk’s Twitter account.
1 29.01.2021 Bitcoin – Changed Twitter Bio to #bitcoin (Musk, 2021b)
- Tweeted: In retrospect, it was inevitable (Musk, 2021c), likely
referring to the decision to change his Twitter bio - 2 28.01.2021 Dogecoin – Posted a picture about Dogecoin, specifically the cover of a
magazine named Dogue (Musk, 2021d) - 3 25.12.2020 Dogecoin – Tweeted: Merry Christmas & happy holidays and posted a
picture which includes, among other things, the Dogecoin
symbol (Musk, 2020b) - 4 20.12.2020 Dogecoin – Tweeted: One word: Doge (Musk, 2020c)Changed Twitter Bio to Former CEO of Dogecoin (Goodwin,
2020) - 5 20.12.2020 Bitcoin – Tweeted: Bitcoin is my safe word (Musk, 2020d) Posted a picture about Bitcoin, specifically how Bitcoin keeps
a person from living a productive life (Musk, 2020e)Tweeted: Bitcoin is almost as bs as fiat money (Musk, 2020f) - 6 18.07.2020 Dogecoin – Tweeted: Excuse me, I only sell Doge! (Musk, 2020g)Posted a picture about Dogecoin, specifically a cloud named
dogecoin standard which is overrunning the global financial
system (Musk, 2020h)
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We investigate the impact of Elon Musk’s Twitter messages on cryptocurrency markets. By
applying event study methodology, the impact of six Twitter events from 2020 and 2021 on
return and trading volume of the mentioned cryptocurrency is analyzed. Across all events, we
identify significant increases in trading volume that are attributable to the events. Four of the
Twitter activities are likely only reactions to previous market events and relate to little or no
significant price reactions. The other two events, however, do not seem to be reactions but
independent actions which result in huge increases in trading volumes and large and significant
positive abnormal returns:
• Musk’s Twitter bio change to #bitcoin resulted in significant CAR of 6.31% over 30
minutes, which increased to 13.19% over one hour and peaked at 18.99% over a period
of 7 hours.
• Musk’s tweet One word: Doge resulted in significant CAR of 8.17% over a window of
five minutes, peaking at 17.31% over the period of one hour.
These two events illustrate the significant impact Elon Musk’s Twitter activity can have on
cryptocurrency markets. While the Twitter bio change might have been meant to be a serious
sign of support for Bitcoin, the tweet about Dogecoin was a joke—as Musk later admitted
himself (Krishnan et al., 2021). Considering that a joke made by the richest person in the world
has caused such a significant market reaction illustrates the impact of influential individuals on
cryptocurrency markets. While Musk’s behavior and communication can be deemed positive
or funny in nature (and therefore arguably uncritical), similar research has already revealed that
negative tweets can also have a negative impact on financial returns (e.g. Brans and Scholtens,
2020; Ge et al., 2019). This is also conceivable for cryptocurrency markets.
The presented results show that individual tweets can have a significant influence on returns
and trading volumes of cryptocurrencies, and can therefore be a basis for a great deal of further
research. 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. This becomes especially relevant against the
background of coordinated manipulation via so-called pump and dump schemes, in which the 10
prices of cryptocurrencies are artificially driven up (Mirtaheri et al., 2019; Pacheco et al.,
2020). Additionally, the existence of informed trading could be analyzed based on trading
volumes before specific social media events (Ante, 2020; Feng et al., 2018) or by analyzing
the associated transparent flow of cryptocurrencies and stablecoins (Ante et al., 2021). Another
promising avenue could be the analysis of corporate announcements, such as Michael Saylor,
CEO of Nasdaq-listed MicroStrategy Inc. announcing the corporate acquisition of Bitcoins
(Saylor, 2020).
Our results lead to the question under which conditions people in the public eye should
comment on specific cryptocurrencies. If a single tweet can potentially lead to an increase of
$111 billion in Bitcoin’s market capitalization, a different tweet could also wipe out a similar
value. No simple or quick “solution” to that challenge is foreseeable, as individuals should
naturally be allowed to express themselves freely and cryptocurrency markets are still
relatively unregulated compared to, for example, stock markets, where similar challenges exist
(e.g., Ge et al., 2019).
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Elon Musk Life 