How Elon Musk's Twitter Activity Moves Cryptocurrency Markets

Abstract

Elon Musk, the richest person in the world, is considered a technological visionary and has over 44.7 million Twitter followers. We analyze to what extent Musk’s Twitter activity affects short-term cryptocurrency returns and volume. Based on six recent cryptocurrency-related Twitter activities, we identify highly significant abnormal trading volume following each event. Furthermore, we discover significantly abnormal returns of up to 18.99% for Bitcoin and 17.31% for Dogecoin across different time frames. Nevertheless, not all tweets lead to significant abnormal returns. Our study shows the significant impact that social media activity of influential and well-known individuals can have on cryptocurrencies.