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Dogecoin soars as Elon Musk tweets about it

Photo of: Joseph Stone
by Joseph Stone

Just an April fool’s joke? The Musk effect is happening again. After a tweet from the boss of Tesla and SpaceX, the value of DOGE soared by 35% within minutes.

This is enough to give more grist to the detractors of cryptocurrencies. The latter criticize in particular the high volatility of these assets. Some transactions can have a major influence on prices.

But sometimes a simple tweet is enough. At least when your name is Elon Musk. The billionaire is once again in the news. And the boss of Tesla and SpaceX is interested as often in the Dogecoin (DOGE).

“SpaceX will literally put a Dogecoin on the moon,” he wrote on April 1. A simple April Fool’s joke or a banal joke as Musk has the secret, especially about DOGE? That’s not the significant thing.

For crypto investors, the result is immediate. And this is no longer a first. Within minutes, the value of the cryptocurrency soared by 35% to reach on highest level of the last 6 weeks.

Why such a price reaction for what is probably just a joke? Probably because the Musk effect is now known, and proven. Blockchain Research Lab recently devoted a study to this powerful, but unpredictable lever.

The tweets of the American boss can thus trigger a rise in cryptocurrency values. For opportunistic investors, these events can therefore be opportunities to easily pocket a capital gain.

One developer is aware of this and has designed a trading bot that is aligned with Elon Musk’s messages. Its purpose is to automatically trigger the purchase of crypto mentioned in his tweets.

Such bots are not a novelty, however, as its creator explains to Decrypt. Traders already use comparable tools to buy or sell stocks based on influencers’ statements.

Now, he adds, such order automation technologies “are particularly suited to cryptocurrency markets, where comments from social media influencers like Musk often sway prices. “

In 2021, the price of Dogecoin thus owes much to the billionaire’s contributions. The asset began the year at just $0.004. On April 1, with this latest tweet, it was already up more than 1,500% year-on-year.