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Elon’s In-Tweet Romance With Doge: How Does It Impact Crypto?

By CoinJoy (via PublishOx)

Elon Musk loves letting his inner doge out — anyone following him on Twitter can confirm that. Over the last few years, he has also seemingly become a huge proponent of cryptocurrencies. So when his two passions for dogs and crypto collide — as of late, this has been happening quite often — Musk shows a tendency to tweet playful memes referring to a certain dog-branded cryptocurrency. To him, that’s an amusing distraction. To potential investors all around the world, that’s a call to action

While certain billionaire’s tweets regarding Dogecoin and Bitcoin have been noted to correlate with surges in the value of the respective currencies, his de-facto influence on the cryptomarket remains subject to speculation. Moreover, the nature of this influence has recently become controversial enough to capture the attention of SEC — apparently, much to Elon’s amusement.

So is there a way to determine the extent to which Musk’s memeful tweets affect crypto? And does he really have enough market clout to propel the value of currencies by posting a meme?

The Musk Factor

It’s not just SEC paying close attention to Elon’s tweets — scientists do that too. Lennart Arte, a blockchain researcher from the University of Hamburg, has recently conducted an event study that provides some insight into the actual impact of Musk’s social media activity on crypto. 

Attempting to estimate the scope of Elon’s influence of on the market, Arte selected six of his recent tweets (dubbed in the paper as events) referring to Bitcoin and Dogecoin and analyzed the corresponding shifts in trading volume and prices of both currencies before and after each event. 

Using the event study methodology, Ante then calculated cumulative abnormal return (CAR) and cumulative abnormal trading volume (ATV) – two indicators that help to establish a casual link between Musk’s tweets and subsequent cryptocurrency fluctuations as well as determine the share of cryptocurrency returns and trading volume that can be attributed to Elon’s Twitter activity. 

Ante identified significant abnormal returns in four out of six events selected for the study. In other words, at least four tweets about crypto posted by Musk had a direct connection to subsequent price and trade volume fluctuations of the corresponding currencies. For instance, here’s what happened to Bitcoin after Elon changed his Twitter bio to #bitcoin this January:

BTC chart

Within an hour after the event, Bitcoin trading volume increased from 5,000 to around 20,000 trades per hour, while its price jumped from about $32,000 to about $38,000, increasing the market capitalization of Bitcoin by $111 billion. If these numbers don’t look impressive enough, here’s a graph illustrating how DOGE/USDT trading volume skyrocketed from $1,942 with an average of 9 trades per minute to about $299,330 with 775 trades per minute right after Musk came up with this brilliant tweet on December 20:

Price change

While not all of the analyzed tweets led to significant surges in currency value (in fact, one of the tweets referring to Bitcoin was followed by a 1.7% decline in its price), Ante concludes that two of the Musk’s activities with especially high CAR — namely the change of his Twitter bio to #bitcoin and the one-word tweet about Dogecoin — have indeed resulted in huge increases in trading volumes and large positive abnormal returns for both currencies. 

To the moon?

Alright, so now there is scientific evidence that Elon Musk can indeed move cryptomarket with his tweets. What does this mean for the market and its participants? 

For one, if a playful tweet by a billionaire with a certain appreciation for dogs — even if he is one of the most influential people in the world — can make currency prices skyrocket, a less amusing tweet could also make the market crumble. This is something all cryptocurrency investors should keep in mind.

Another thing investors should probably consider is that the next time funny billionaire Elon is in the mood to post another soon-to-become viral meme, there’s a good chance they could capitalize on that. Or they could lose. Who knows? The way things are now, predicting the virality of Musk’s memes could totally become Twitter’s next favourite sport. 

Jokes aside, moving entire markets by virtue of posting a tweet seems like too much power even for a person like Elon. Whether Musk’s current affinity for crypto will prove its blessing or its curse, remains to be seen. 


  1. https://coinjoy.io/media/200/elon-s-in-tweet-romance-with-doge-how-does-it-impact-crypto