How Twitter Influencers Affect Cryptocurrency Prices?

bitcoin, currency, technology

Every cycle in the crypto markets has a slow buildup and a peak wave of “mania”. The later stage is usually filled with retail investors that have not much experience or prior research before choosing to buy bitcoin and other cryptocurrencies.

Due to this, these investors base their trades upon information found on social media and video streaming platforms. Youtube, TikTok, and other platforms are commonly known for being low-quality information sources that aim to drive new investors towards projects that have luring affiliate programs and no real products.

It is easy to spot them though. Very emotional faces in the Youtube feed is the latest trend among them. So, in this way, they are also relatively easy to avoid while educating yourself. But what about influencers with a high level of authority? When they choose to promote a project, we usually have major fluctuations in cryptocurrency prices

Let’s take a look at some of the most popular influencers that had an effect on the past two market cycles and what we can learn from their actions.

Large Scale Influencers

World-known tech business owners and celebrities are usually a part of this list. While celebrities (musicians, athletes, etc.) are very vocal about their position in crypto as of late, their influence is rather mild. The same is not true for owners of public tech companies. Let’s take a look at the most popular cases of each market cycle.

2017 – John McAffee

Who doesn’t remember John McAffee? The eccentric billionaire founder of McAfee antivirus was the main topic of many controversies during 2017, during the rampant growth of scammy ICOs and wild speculation. John was famously known to have caused massive growth in privacy-oriented cryptocurrencies Verge, Monero, and ZCash due to his background, and later used his influence to promote (shill) projects that could afford him.

His wildest, by far, the bet was with himself. If Bitcoin would not reach $1 million by the end of 2020, he would eat his own privates. Knowing his personality, many believed this to be true and invested based on this. Shortly after, however, most of these investors would lose money, as McAfee’s influence was damaged, and the bear market was only getting started.

In 2020 McAfee retracted his bet saying that he believes Bitcoin to be useless, and was later arrested in Spain, where he currently remains incarcerated. Part of the reasons behind his imprisonment is tax-related, following his massive payments in cryptocurrency.

2021 – Elon Musk

While some people may not have been around when John McAffee was the most popular crypto influencer, pretty much everyone is aware of Elon Musk’s personal involvement with cryptocurrency.

The founder of SpaceX and Tesla started wildly promoting Dogecoin on Twitter, entertaining the idea that it could be adopted and used in the future. The continuous promotion has led to many memes about the founder and has led DOGE to the incredible growth of 13000% over the past 5 months.

But that’s not the only influence Elon has on the crypto markets. He is also known for his involvement in Bitcoin, albeit speaking for Tesla instead of his personal holdings.

  • In February 2021, Tesla announced a massive purchase of Bitcoin with their treasury reserves, an amount which has since greatly appreciated. Bitcoin grew more than 20% in value in a single day.
  • In March 2021, Tesla announced it will be accepting Bitcoin for its cars. The coins would remain in the position of Tesla and not sold in the open market, in an effort to increase their holdings. Bitcoin was affected positively and grew nearly 10% in a single day.
  • In April 2021, Tesla sold part of their Bitcoin holdings to, in the words of Elon, “test the coin’s liquidity”. The 10% sold position amounted to a little less than $280 million. Bitcoin dropped more than 10% in a single day.
  • In May 2021, Elon announced that Tesla will no longer be accepting Bitcoin for car reservations and purchases, a decision that seemed rather controversial since his March announcement. Bitcoin’s price dropped nearly 15% in a single day.

What Does This Mean For The Crypto Markets?

As you can see, influential personalities like John McAffee and Elon Musk have the ability to move the markets based on their tweets and announcements. This is a negative aspect of the crypto markets that is yet to be solved. However, it is somewhat understandable when looking at the early stage of market growth.

That said, many institutions are still hesitant to invest in markets that are so easy to manipulate through a change in public sentiment. We expect this to change as the market continues to develop and grow in adoption, but at the time it is still considered to be a bottleneck.

On the contrary, the more influential personalities that choose to embrace and promote Bitcoin, the higher the potential of Bitcoin growing towards the update.

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