TL;DR
- When Elon Musk tweets about crypto, the market almost always reacts accordingly.
- Elon Musk acquired Twitter for a whopping $44 billion on October 27, 2022.
- Analysts are optimistic about the Twitter takeover because of its positive effects on the industry.
- $DOGE can benefit from the Twitter takeover because of its proposed use cases on the platform.
- Celebrity endorsements have become a strong fundamental factor that influences the crypto market.
- Musk’s tweets are considered legal but law experts warn that it may trigger tighter regulations from financial authorities.
The bird is free! And let that sink in for a while.
Entering Twitter HQ – let that sink in! pic.twitter.com/D68z4K2wq7
— Elon Musk (@elonmusk) October 26, 2022
Elon Musk acquired Twitter for a whopping $44 billion on October 27, and many crypto traders and investors are now raising some concerns, wondering how this takeover could influence the digital asset industry.
The “Elon Musk Effect” on Crypto
Dubbed “The DogeFather," Elon Musk has been associated with cryptocurrency, especially Bitcoin, Dogecoin, and Ethereum. When Elon tweets, the crypto market moves.
Musk’s power to move the crypto market has been displayed many times already:
Dogecoin is the people’s crypto
— Elon Musk (@elonmusk) February 4, 2021
- On February 4, 2021, he tweeted repeatedly about how much he loved DOGE, driving the price up by almost 50% in a day and by 10% within an hour.
You can now buy a Tesla with Bitcoin
— Elon Musk (@elonmusk) March 24, 2021
- After a tweet saying "You can now purchase a Tesla with bitcoin," BTC surged to around $65,000 within a month.
Tesla will make some merch buyable with Doge & see how it goes
— Elon Musk (@elonmusk) December 14, 2021
- His tweet announcing that Tesla would begin taking DOGE as payment caused the token to rise 43% in less than two hours.
In April 2022, Musk mentioned Dogecoin as a potential payment option for Twitter Blue and the token quickly surged by 9%
Musk became a staple of Bitcoin discussions, and Tesla was a major factor in the cryptocurrency's price movement. Tesla's public announcement of its BTC purchases, acceptance of BTC as payment, sale of some of its BTC holdings, and cancellation of Bitcoin as a payment option all had big effects on the market and made crypto assets even more volatile than they already were.
What Happens After the Twitter Takeover?
Analysts are optimistic about the acquisition's long-term effects. Since Musk is a big fan of cryptocurrency, this takeover will definitely have a big impact on the industry as a whole.
In fact, Twitter has already introduced NFT Tweet Tiles, a cryptocurrency service that lets users purchase, trade, and showcase their non-fungible tokens (NFTs) without leaving the platform. Rarible, Magic Eden, Dapper Labs, and Jump.trade are the current markets that support the integration. OpenSea, the largest NFT marketplace, has not yet supported this service.
The Twitter takeover is also good news for the Web3 ecosystem, Elon Musk has declared that open-source Twitter algorithms would strengthen trust in the site and combat the threat of spam bots. Twitter is now working with large crypto exchanges to combat spam bots on the platform, which spread fraudulent links to commit financial scams. This move should make Twitter a safer place for crypto investors looking for valuable information to aid their research.
Obviously, DOGE is the first crypto expected to benefit from the Twitter takeover as Musk ranks Dogecoin as his favorite cryptocurrency, making it the clear option for Twitter. In fact, it is being eyed as a currency for the implementation of a tipping or subscription system.
Since the takeover, DOGE rallied about 120% within 48 hours. From $0.0687 before the official acquisition, DOGE is now trading at around $0.1 at the time of writing.
Should You Be Worried About Price Manipulation?
Elon Musk has 112.6 million Twitter followers and clearly has the power to move crypto markets.
Quite understandably, though, the popularity and influence of famous people like Musk will always move volatile markets because of FOMO (fear of missing out).
Pump-and-dump schemes are one of the biggest schemes in crypto that many naive investors fall for because there isn't enough regulation preventing it. In these schemes, people artificially raise the value of an asset by spreading false information in order to attract naive investors to put their money into these projects.
Once enough investors have entered a position, the early investors start dumping the tokens which leads to a crash in the prices, leaving the naive investors with huge bags of tokens that are practically worthless.
Celebrities promoting Crypto
In recent years, celebrity endorsements have become a strong fundamental factor that can influence the crypto market. Aside from Decentralized Finance (DeFi), the NFT industry is also a victim of social media influence.
Many celebrities ranging from A-list actors to DJs have their own NFT collections and some have even bought other NFTs projects which leads to speculation in the prices of NFT projects because celebrities do own some of them.
#NewProfilePic I don’t need to see when I have the vision 🚀 welcome the 8th @BoredApeYC to the Aoki family. #9309 pic.twitter.com/RSJcUuAe5U
— Steve Aoki (@steveaoki) January 4, 2022
While Musk’s tweets are considered legal, law experts warned celebrities and CEOs with large crypto holdings to exercise caution before publishing anything on social media that may be seen as an attempt to manipulate or deceive the cryptocurrency markets. Still, on a platform like Twitter, the courts would always assume that most readers wouldn’t take financial advice from mere tweets.
At the end of the day, it’s about doing your own research and due diligence before investing in any type of asset. Regardless of Elon Musk’s influence, the decision to buy, hold, or sell crypto will always be in your hands.
Disclaimer: The information and publications in this article are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation offered or endorsed by Coins.
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