Erratic tech-billionaire Elon Musk has a pretty interesting record when it comes to cryptocurrency. Despite being the CEO of both Tesla & SpaceX he still finds the time to use Twitter for posting memes and not-so-cryptic messages about certain financial assets.
Elon’s outlandish social media tactics have become infamous for creating vicious movements in both traditional stocks and the crypto market. He’s even gone as far as to proclaim himself ‘The DogeFather’ & ‘MemeLord’ to his 75 million followers.
Love him or hate him; Elon sure knows how to create price action.
Video: Elon Musk & Mark Cuban Discuss Potential ‘Real World’ Uses Of Dogecoin
Why Does Elon Love DOGE?
For most of us, Elon’s interest in bitcoin seems reasonable enough, but his passion for a memecoin (shitcoin) that was literally created to take the piss out of cryptocurrency is where it becomes a bit of a head scratcher.
Elon has justified his DOGE obsession in the past by saying that: “fate loves irony… wouldn’t it be funny if the thing that was designed to be a joke currency ended up being the real currency?”
It’s also a crypto asset that was small enough for his individual prods to create genuine price movement.
James Angel, Professor of Finance at Georgetown University, said that:
“The volatility of meme coins and their vulnerability to gratuitous tweets make them a dangerous place for investors… they are not investments in projects that yield predictable cash flows, he adds. “They are speculative games of musical chairs.”
To understand just how much power Musk has enjoyed over DOGE and the crypto market more broadly, you need to take a quick look at what he has tweeted and observe the price action that followed…
A Brief History of Elon’s DOGE Moving Tweets
- December 20, 2020: Musks tweets ‘One word: DOGE’ — the price spiked 25%
- February 4, 2021: Musk makes multiple tweets about DOGE — the price surged over 60%
- May 9, 2021: Musk calls DOGE “a hustle” on SNL — the price tanked over 30% in a few hours.
- May 12, 2021: Musk tweets Tesla won’t accept bitcoin as a payment — crypto markets fell 25% in the following days.
- December 15, 2021: Musk tweets that Tesla will accept DOGE — the price surged 25%
Musk’s DOGE Tweets Aren’t Harmless
You can see in the chart above that after every price spike, a rapid sell-off follows. This is exactly where most retail investors get burned.
All jokes aside, Musk’s Twitter conduct has caused some serious damage to the wallets and bank accounts of everyday investors, which in turn has attracted brutal criticism from some of crypto’s most prominent figures.
“Tweets that hurt other people’s finances are not funny [they are] irresponsible.”
Now, while you may be thinking: “If you’re dumb enough to be buying substantial amounts of dog-themed crypto on the internet then you probably deserve to lose money…” but this is where things get tetchy.
Unlike the world of traditional investing, which requires a lengthy process of official verification, research and effort to become involved, the wonderful world of crypto has very few barriers to entry. Any tech-savvy 14-year-old with an iPhone and their mum’s credit card can start investing in crypto, no questions asked.
This means that quite often, the level of financial literacy possessed by the average crypto investor is probably a good deal lower than that of the average investor in the stock market. So, when you combine this lack of knowledge with an audience of millions of eager Musk-worshipping tech-bros; you’ve got yourself a recipe for market manipulation that practically guarantees losing money long-term.
While Ol’ Musky obviously gets an ego boost out of trolling markets via Twitter, it’s pretty obvious that he doesn’t care about the implications of his actions on the finances of others.
Regardless, it seems as though Elon’s power is slowly fading
The End of Musk’s Power?
As we’ve learned, a Musk tweet usually creates a 20%+ price move when it comes to DOGE. However his most recent ‘McDonalds’ tweet only caused an extremely short-lived 9% spike. In the hours following, this eventually flattened out and held steady at a measly 7% overall gain.
For starters, the crypto market is currently going through a “rough patch” with the total market down 25% year-to-date. This means that there’s less money sloshing around in the pockets of investors and almost everyone is far less willing to risk it all on the back of a DOGE-themed tweet.
Secondly, the recent changes to the broader macroeconomic conditions seem to have made Elon’s Twitter account somewhat flaccid. As the Federal Reserve hikes up interest rates, and fiscal policy around the world constricts, investors couldn’t give a shit about Elon’s random thoughts — they just wanted to get their assets out of risk-heavy sectors and into something that won’t fall another 30% from here…