The Muskocalypse: How Elon Musk’s Tweets Demolished Retail Investors
Elon Musk, the billionaire entrepreneur and CEO of Tesla, SpaceX, and other companies, has become a prominent figure in the world of cryptocurrency. His tweets about Bitcoin, Dogecoin, and other digital currencies have caused prices to skyrocket or plummet, often within a matter of hours. While some investors have profited from Musk’s social media musings, others have suffered devastating losses. In this article, we’ll explore some of the most impactful tweets that have contributed to what we’re calling “The Muskocalypse” – the destruction of retail crypto investors.
The Power of Elon’s Tweets
The power of Elon Musk’s Twitter account is undeniable. With over 134.1 million followers (as of writing), Musk’s tweets have the ability to move markets and impact investor sentiment in a matter of seconds. However, while his tweets may bring joy to his loyal fans, they have been the cause of significant turmoil for retail investors.
Retail investors are often at a disadvantage when it comes to investing, be it on crypto currency and the stock market. They may not have access to the same information and resources as institutional investors, and they may be more susceptible to emotional decision-making.
Every time Elon sends out a tweet, retail investors react by buying or selling cryptos based on what he has said. This can be good for them if he says something positive about the currency, but it can also be bad if he says something negative about the cryptos (and there have been plenty of times where he does).
The Impact of Musk’s Tweets on Retail Investors
Retail investors, or individual investors who trade on their own behalf rather than on behalf of an institution, often rely on social media and news headlines to make investment decisions. This makes them particularly vulnerable to the influence of powerful individuals like Elon Musk.
When Musk tweets about a particular cryptocurrency, it can cause a surge in demand, driving up the price and creating a self-fulfilling prophecy. Retail investors who see the hype and jump on the bandwagon may make significant gains, but they are also at risk of buying in at the peak of a price bubble and losing money when the price crashes.
Moreover, Musk’s tweets can be unpredictable and erratic, making it difficult for retail investors to make informed decisions. For example, when Musk tweeted that Tesla would no longer accept Bitcoin as payment due to concerns about its environmental impact, the price of Bitcoin plummeted by nearly 30%. This sudden drop caught many retail investors off guard, leaving them with significant losses.
Happy Days
On April 2, 2019, Musk tweeted “Dogecoin might be my fav cryptocurrency. It’s pretty cool.” This tweet caused a surge in the price of Dogecoin, which increased by more than 30% in just a few hours. The sudden price increase caught the attention of investors, traders, and the media, and many people started to wonder if Musk was serious about his endorsement of Dogecoin.
Just a few hours later, Musk followed up with another tweet, “Dogecoin rulz,” which caused an even larger spike in the price of the cryptocurrency. Within 24 hours, the price of Dogecoin had increased by more than 50%, and it had become one of the most talked-about cryptocurrencies on social media.
On April 13, 2019, Musk tweeted, “Cryptocurrency is my safe word.” While the tweet was not specifically about any particular cryptocurrency, it did generate some buzz among the crypto community and may have contributed to increased interest in cryptocurrencies at the time.
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On April 30, 2019, Musk tweeted about the cryptocurrency Ethereum, saying, “Ethereum.” This tweet was relatively simple, but it did cause a small increase in the price of Ethereum within a few hours of the tweet. Some analysts speculate that Musk’s tweet may have been a sign of support for Ethereum and could have contributed to increased investor confidence in the cryptocurrency.
Resuming the Muskocalypse
- On January 10, 2020, Musk tweeted, “Just pumping Bitcoin. lol.” This tweet caused some speculation among investors and traders, who wondered if Musk was signaling support for Bitcoin and whether that would result in an increase in the cryptocurrency’s value.
- Also on January 10, 2020, Musk tweeted, “Bitcoin is not my safe word.” This tweet was a humorous response to his earlier tweet about “pumping” Bitcoin, and it served to clarify that Musk was not necessarily endorsing the cryptocurrency.
- On October 16, 2020, Musk tweeted, “Mars economy will run on crypto. Marscoin?” This tweet was a more serious suggestion about the potential use of cryptocurrency in a future Mars economy, and it led to some speculation about the feasibility and implications of using crypto on a different planet.
- On December 20, 2020, Musk tweeted, “Bitcoin is my safe word.” This tweet was a play on his earlier tweet about cryptocurrencies being his “safe word,” and it again generated some buzz among investors and traders.
- Also on December 20, 2020, Musk tweeted, “Just sent some Doge to a friend lol.” This tweet was a reference to the cryptocurrency Dogecoin, which was originally created as a joke but has since gained a following among some investors.
In the same tweet, Musk also wrote, “One word: Doge,” further highlighting his interest in the cryptocurrency.
- Finally, in the same tweetstorm on December 20, 2020, Musk tweeted, “Bitcoin is almost as bs as fiat money.” This tweet was a more critical take on Bitcoin and its perceived value, suggesting that it may not be fundamentally different from traditional currencies.
The First Strike: Bitcoin FUD
The events surrounding Elon Musk’s tweets regarding Bitcoin and Tesla have been met with controversy and accusations of hypocrisy. On March 24, 2021, Musk tweeted that Tesla would accept Bitcoin as a mode of payment, which caused the price of Bitcoin to skyrocket. However, on May 12, 2021, Musk tweeted that Tesla would no longer accept Bitcoin as payment for its cars, citing environmental concerns. After Elon Musk’s tweet the cryptocurrency market experienced a significant drop.
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Bitcoin, which had been trading at around $58,000 at the time of the tweet, plummeted to a low of $45,000 within hours of the announcement and eventually dropping to $30000 on 26th June 2021, a drop of around 93% in a matter of less than 2 months. The price of other cryptocurrencies, including Ethereum, also experienced a significant decline.
Musk’s comment was criticized by many in the cryptocurrency community, who argued that Bitcoin’s energy usage was already well-known and that Musk’s decision seemed to be motivated more by personal preference than a genuine commitment to sustainability.
The announcement also caused a stir within the cryptocurrency community, with many questioning the validity of Musk’s claims about the environmental impact of Bitcoin mining. While it is true that Bitcoin mining does consume a lot of energy, many argued that the use of renewable energy sources for mining has been on the rise, and that other industries, such as the traditional banking system, also consume significant amounts of energy.
The impact of Elon Musk’s tweets on crypto and the subsequent market volatility has affected mostly the retail investors who have put their savings into cryptocurrencies. Many retail investors who had invested in cryptocurrencies like Bitcoin, Dogecoin, and Ethereum, based on Musk’s previous positive tweets, saw their investments plummet in value following Musk’s negative tweets.
Some retail investors who had invested their life savings in cryptocurrencies lost a significant amount of money, and many were forced to sell their holdings at a loss. This has led to financial hardship for many retail investors, who were relying on their investments to provide for their families or to fund their retirement.
There have also been reports of retail investors being scammed by fraudulent cryptocurrency schemes that promised high returns, leveraging the hype around Musk’s tweets. In some cases, these schemes used Musk’s name or image to falsely suggest that he endorsed their products, leading many retail investors to invest their money in these fraudulent schemes.
Crypto Twitter Wars
Musk’s tweets about Bitcoin and Dogecoin have often been met with strong reactions from other prominent figures in the cryptocurrency community. In June 2021, Michael Saylor, the CEO of MicroStrategy, tweeted that he had hosted a meeting of North American Bitcoin miners to discuss Musk’s concerns about the environmental impact of mining. Saylor’s tweet was critical of Musk, accusing him of spreading misinformation and suggesting that he was ignorant of the facts about Bitcoin’s energy usage and thus hammering Muskocalypse.
Musk responded by tweeting, “This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market. When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.” This tweet caused the price of Bitcoin to rise by 10% within hours, illustrating Musk’s power to move the market with a single statement.
The Dogecoin Menace
Musk’s tweets about Dogecoin, a cryptocurrency created as a joke in 2013, have been particularly notorious for their impact on the market. On February 4, 2021, Musk tweeted “Dogecoin is the people’s crypto” and “No highs, no lows, only Doge” followed by a tweet on February 7, 2021, saying “Who let the Doge out.”
On April 1, 2021, Musk tweeted, “SpaceX is going to put a literal Dogecoin on the literal moon,” Although the tweet was widely seen as a joke, retail investors took it seriously and began buying up Dogecoin in large quantities, causing the price to soar. In just over a month, from March 31 to May 9, the price of Dogecoin rose from $0.0539 to $0.6358, gaining more than 1000% in value. Many investors saw this as a sign that Musk’s tweets had the power to significantly impact the market, and they continued to invest heavily in Dogecoin.
On May 8, 2021, Musk hosted “Saturday Night Live” and made a joke about Dogecoin being a “hustle.” This caused the price of Dogecoin to drop by 30% in a matter of hours. Though it’s not much of a low.
However, just a few days later, on May 12, 2021, Musk sent out another tweet that had a very different effect on the cryptocurrency market. This time, Musk announced that Tesla would no longer accept Bitcoin as payment for its cars, citing concerns over the environmental impact of Bitcoin mining. Thus, giving a clear sign of Muskocalypse.
The real decline started after May 12, as many investors who had bought into the cryptocurrency due to Musk’s previous tweets. Some investors had seen gains of over 1000% in just a few weeks, and the sudden drop in price was a harsh reality check. In October 2022, after the all-time high of $0.6358 in May 2021 the price plummet to $0.05858 which is the downfall of almost 1000%. Some investors were left wondering whether Musk had intentionally manipulated the market to benefit himself or if he was simply unaware of the impact his tweets could have.
In Junue 2021 Elon Musk was sued for $258 billion on Thursday by a Dogecoin investor who accused him of running a pyramid scheme to support the cryptocurrency. The complaint said Dogecoin’s selloff began around the time Musk hosted the NBC show “Saturday Night Live and, playing a fictitious financial expert on a “Weekend Update” segment, called Dogecoin “a hustle.”
The Final Blow: Musk’s Tweets on Shiba Inu Coin
In March 14, 2021, Musk tweeted “I’m getting a Shiba Inu”, the same breed that inspired the creation of Dogecoin. This tweet caused a surge in the price of Shiba Inu Coin, a new cryptocurrency that had only been created some days prior. However, in late June 2021, Musk tweeted, “My Shiba Inu will be named Floki.” This tweet caused a different cryptocurrency, Floki Inu, to surge in price, while Shiba Inu Coin lost over 50% of its value.
The fallout from this tweet was particularly devastating for retail crypto investors who had invested in Shiba Inu Coin based on Musk’s initial tweet. Many accused Musk of manipulating the market and causing harm to small investors who couldn’t afford to lose their money. Some even called for regulatory action against Musk, arguing that his tweets had caused significant financial harm to innocent people.
The Future of Elon’s Tweets
The future of Elon’s tweets is uncertain. While the SEC has yet to make a move against him, it’s clear that regulation will be coming soon. If this happens, it could seriously impact Elon’s ability to influence retail investors in the stock market.
The most likely result would be an outright ban on Twitter by companies like Tesla and SpaceX–which would mean no more tweets from Elon himself! But even if they don’t go that far, there are other ways that regulations could limit his reach: For example, if he were forced to disclose all of his holdings before tweeting about them (which would be required under current SEC rules), then only people who already knew about those stocks would benefit from his advice; those who didn’t know about them wouldn’t follow along at all because they wouldn’t have any idea what he was talking about!
Lessons Learned
The Muskocalypse has highlighted the immense power of social media in shaping financial markets. With a single tweet, Elon Musk can cause billions of dollars in market value to be wiped out, or create massive gains for those who happen to be in the right place at the right time. This has led to calls for greater regulation of social media, especially when it comes to the dissemination of financial information.
However, it’s also important to recognize that investors have agency and responsibility when it comes to their own investments. While it’s tempting to follow the hype and invest in the latest cryptocurrency that Elon Musk tweets about, it’s crucial to do your own research, understand the risks involved, and make informed decisions.
Moreover, it’s important for investors to diversify their portfolios and not put all their eggs in one basket. Cryptocurrency, like any other investment, comes with risks and rewards, and it’s important to balance your investments across different asset classes to minimize risk and maximize returns.
Final Thoughts
In conclusion, Elon Musk’s tweets have had a profound impact on the world of cryptocurrency, causing massive gains and losses for investors. While it’s important to hold powerful individuals accountable for their actions, it’s equally important for investors to take responsibility for their own financial decisions and not blindly follow the hype. To navigate the Muskocalypse, retail investors should focus on the fundamentals of investing, approach Musk’s tweets with a critical eye, take a long-term perspective, and consider working with a financial advisor or investment professional. The Muskocalypse may have caused pain for some, but it’s also a valuable lesson in the power of social media and the importance of informed investing.
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Analytical accountant and curious blogger with over 5 years of experience as an Audit Associate and accountant. With expertise in auditing, accounting, and finance I help organizations drive top-notch financial management practices to achieve organizational success.