Andrew Hayward, Author at The Motley Fool Australia

How Elon Musk's tweets move the cryptocurrency market

Andrew Hayward — Fri, 18 Jun 2021 22:00:00 +0000

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Significant price fluctuations are common in the famously volatile cryptocurrency market, but there's a curious trend emerging over the last year or so: whenever Tesla and SpaceX CEO Elon Musk tweets about a crypto coin, the price often shoots to the sky or sinks like a stone. Musk has embraced the cryptocurrency community with open arms, positioning himself as the world's best-known Dogecoin (CRYPTO: DOGE) fan and briefly boosting the fortunes of Bitcoin (CRYPTO: BTC). The market is susceptible to the changing winds of social media sentiment, and Musk has become the face of that up-and-down action thanks to his expansive reach, including 57 million Twitter (NYSE:TWTR) followers. He's a champion to Dogecoin investors in particular, as his frequently shared memes and goofy tweets often result in a notable price leap for the "joke" coin. However, Musk's recent dabbling in the Bitcoin market has lost him some fans in the process, given how much the price has dipped following big news he shared from Tesla. Here's a look at how Musk's Twitter use has impacted the crypto markets.

The Dogefather

As the CEO of multiple major firms, Musk's public affection for Dogecoin and its community might catch some investors off-guard. He has called himself the "former CEO of Dogecoin" and "The Dogefather," and briefly planned to sell a non-fungible token (NFT) original music video inspired by DOGE before deciding to hold onto it (the top bid was over $1.1 million). Musk first came out as a Dogecoin fan in March 2020 and has since tweeted about it many times, often with a startling price jump thereafter. For example, when Musk tweeted a Lion King-inspired Dogecoin meme in February 2021, the price jumped more than 50%. When he teased a Dogecoin cameo for his May Saturday Night Live hosting gig, the price increased by more than 20%. As of this writing, Dogecoin's price is up more than 5,800% since the start of the year, and Musk's continued impact is hard to deny. Still, not every Musk move pumps DOGE's price: it dropped some 30% after his SNL appearance, during which he joked that it was a "hustle." Doge hype deflated!

Bitcoin back-and-forth

Could Musk's positive price impact extend to Bitcoin, the original cryptocurrency and most valuable coin by market cap? For a while, yes. Musk began tweeting occasionally about Bitcoin in 2020 and even changed his Twitter profile to simply say "#bitcoin" in January 2021, starting a trend among other influencers. A study from the Blockchain Research Lab suggests that the move led to a 19% increase in Bitcoin's price over the span of seven hours. In February 2021, Musk sent the price of Bitcoin soaring when he announced that Tesla had purchased $1.5 billion worth of the cryptocurrency to hold as a reserve asset, and that the company would soon accept BTC payments for its electric cars. Bitcoin's price rose by more than 10% soon after, hitting a new all-time high price, and continued climbing in the days and weeks thereafter. That building momentum came crashing down in May, however, when Musk announced that Tesla would stop accepting Bitcoin payments due to the environmental impact of Bitcoin's energy-intensive mining process. Musk tweeted the news from his own personal account, and Bitcoin's price rapidly sank: it dropped from around $55,000 to about $48,000 within 24 hours, and has since seen recent lows around $32,000. Musk has lost some of his crypto-enthusiast admirers as a result, but to be fair, he has helped nudge the price back upwards too—such as this week, when he tweeted that Tesla could eventually resume Bitcoin transactions once enough of the mining apparatus goes green. Bitcoin's price is up more than 20% over the last week.

Will it continue?

Whether silly or serious, Musk's tweets about cryptocurrency always seem to have some kind of impact on the price of the coin in question. However, as cryptocurrency becomes more mainstream and the market hopefully calms, we'll see how long that remains true. Ethereum (CRYPTO: ETH) co-creator Vitalik Buterin, for example, recently told CNN that he believes that the crypto market will gradually build an "immune system" against such social media meddling. "Elon is not going to have this influence forever," he said. Frazzled cryptocurrency investors can only hope that Buterin is right.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post How Elon Musk's tweets move the cryptocurrency market appeared first on The Motley Fool Australia.

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Andrew Hayward owns Bitcoin, Dogecoin, and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

How Dogecoin rose from meme to major cryptocurrency

Andrew Hayward — Wed, 09 Jun 2021 23:58:00 +0000

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Cryptocurrency enthusiasts and blockchain backers see serious potential for top coins like Bitcoin and Ethereum, which could upend traditional financial systems and impact a wide array of industries.

But there's almost nothing serious about Dogecoin (CRYPTO: DOGE), a so-called "joke" coin that was inspired by a meme of a Shiba Inu dog. Actually, there is one serious detail: the price gains that Dogecoin has experienced so far in 2021. Dogecoin started the year at less than a penny per coin before surging in late January, as a byproduct of the meme stock trend that impacted GameStop, AMC, and others.

But Dogecoin hasn't backed down: it reached a high above $0.73 in May amid the most recent bull run. While it's currently off that mark by over 50% amid wider crypto market declines, Dogecoin's price still sits about 60 times higher than it did on January 1 and it has high-profile advocates nudging it forward. Here's a brief look at how Dogecoin became much more than just a meme.

A New Breed

Dogecoin's origins are a joke. Inspired by the famous Doge meme and the early rise of a nascent Bitcoin in 2013, Adobe software engineer Jackson Palmer posited the idea of Dogecoin as satire. Palmer's idea was put into action when he partnered with IBM software engineer Billy Markus soon after, with Dogecoin's code based on the existing cryptocurrency Litecoin.

Dogecoin investors embraced the goofiness and offbeat origins of the coin, with community members raising money to sponsor a NASCAR vehicle and send the Jamaican bobsled team to the Winter Olympics in 2014. In the years that followed, Dogecoin largely languished on the fringes of the crypto market with a price at a fraction of a penny. After all, it was designed as a joke. It was never really going to be worth anything, right?

In summer 2020, Dogecoin began to earn more attention on social media, including from Tesla and SpaceX CEO Elon Musk as well as YouTube star Jake Paul. Attempts to pump the price up to $1 per coin didn't pan out, but the price did start gradually creeping up toward the end of the year -- even though it still mostly sat beneath one cent per coin.

The Dog Days End

Amidst January's meme stock fiasco, in which social media-led buying sprees sent the prices for GameStop, AMC, and other stocks soaring, investors began looking for the next stock to buy cheap and try to pump to startling new heights. In just over a week, Dogecoin's price jumped from under a penny to nearly $0.08 per coin, before settling around $0.05 for most of spring.

Things only got wilder after that. Dogecoin popped up to $0.40 per coin in April before pulling back but then leapt again to an all-time high of $0.73 in early May. The wider crypto market has been down since then, in part due to Tesla halting Bitcoin payments for its cars due to the environmental impact of cryptocurrency mining. Even at around half the all-time high price, Dogecoin is still up about 6,000% from the start of the year -- giving it around a $44 billion market cap.

Dogecoin still has its doubters and seems more susceptible to the whims of social media sentiment and influencers than other, less-volatile cryptocurrencies. But it also has more true believers than ever, including Musk—who is working with Dogecoin developers—and billionaire investor Mark Cuban, whose Dallas Mavericks NBA team accepts DOGE for merchandise purchases. It also has copycat coins, like Shiba Inu.

Even so, despite the considerable and rapid rise in price, it's tough to call Dogecoin a serious investment. It's more like a rollercoaster: strap in and enjoy the ride, and pray that you don't feel sick in the end.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post How Dogecoin rose from meme to major cryptocurrency appeared first on The Motley Fool Australia.

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Andrew Hayward owns Dogecoin, Bitcoin, and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adobe Systems. The Motley Fool Australia has recommended Adobe Systems. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Andrew Hayward, Author at The Motley Fool Australia

How Elon Musk's tweets move the cryptocurrency market

The Dogefather

Bitcoin back-and-forth

Will it continue?

Wondering where to invest $1,000 right now?

How Dogecoin rose from meme to major cryptocurrency

A New Breed

The Dog Days End

Wondering where to invest $1,000 right now?