Interaction of Social Media And Cryptocurrencies For Investors

Social media platforms have become a popular market research place for cryptocurrency investors as well as for everyone else. Many professional cryptocurrency investors share their ideas about market dynamics, trends and possible future market trends with their followers on social media through their social media accounts and broadcast platforms.

Although there are cases of fraud in such accounts from time to time, it is useful to take a look at the real verified accounts you know and know in social life. Because cryptocurrency investors are a market where people have less information, unlike other investment models. And we must admit that it is much easier to reach investment tips from social media.

One of the social media interactions for cryptocurrency investors is that in addition to investor blogs such as Twitter, Instagram, YouTube, thousands of investors develop strategies to shape market dynamics through Telegram groups. New altcoin types offered to Blockchain exchanges are also introduced to traders through these platforms.

The Role of Social Media as an Investment Driver

As an investment driver, social media is of great importance to cryptocurrency investors. Today, cryptocurrency investors of almost every level follow market dynamics and crypto stock market news through social media platforms. This shapes the movements of the units in the market.

In the past, newspapers, radios, books and schools could be counted as investment drivers. However, today, the most popular, practical and widespread investment driver is undoubtedly social media platforms.

Because they are the areas where cryptocurrency investors communicate with each other. In this way, professional cryptocurrency investors and beginners or other actors in the market can contact each other.

However, manipulations should also be remembered as a disadvantage in addition to the advantages brought by social media. We should not forget that while there are many social media platforms that offer useful publications and content for cryptocurrency investors, there are also malicious ones who aim to manipulate the market.

The Role of Social Media in The Cryptocurrency Market

Social media plays a key role in the crypto market as a place where cryptocurrency investors evaluate trends, trends and potential crises in the market and exchange ideas with each other. Publishers, individual accounts and video platforms on social media have become important elements that determine market dynamics in recent years.

The best example of The Role of Social Media in the Cryptocurrency Market is Elon Musk. We all know that he has shaped the crypto market and made altcoins more popular with his tweets about cryptocurrencies in recent years.

The Power of Twitter and Other Social Media Platforms in The Cryptocurrency Market

Cryptocurrencies are not affiliated with any central authority or institution, they are created and traded digitally, and their value is determined by the market. Bitcoin, the first example of cryptocurrency, emerged in 2008, and the first transfer transaction with Bitcoin took place in 2009.

This virtual money takes its name from the combination of the words bit, which refers to the digital data size of 1 byte, and coin, which means coin. With the popularity of Bitcoin, which has become the focus of investors’ attention, hundreds of cryptocurrencies such as Dogecoin and Ethereum have been launched.

Blockchain technology, which is described as a financial revolution, constitutes the building block of the Bitcoin system and other cryptocurrencies. Blockchain technology allows money transfer without the need for banks or government channels.

All cryptocurrency transactions are recorded as a data file with blockchain technology, which can be considered a public accounting system. From a technological perspective, cryptocurrencies can be considered as a new type of database that can be seen by everyone who joins the network.

The Relationship Between Price Movements in The Cryptocurrency Market And Social Media

The most important difference from a traditional database is that no one can change or update a transaction. The cryptocurrency market, whose number of users and usage area is constantly increasing, is followed daily by many people, like Dollar and Euro prices.

For this reason, individuals or institutions can now choose to follow social media instead of traditional media such as TV, magazines, and newspapers. Therefore, social media is an important source of information for all investors, large or small, in predicting the future values of cryptocurrencies and determining investment decisions accordingly. We can say that Twitter has come to the fore among social media in this sense.

Musk, who has been on the agenda for a long time with his Bitcoin investment in January 2021, announced in his tweet dated March 24 that Tesla brand vehicles can be purchased using Bitcoin, and as a result, he accelerated the price rise of Bitcoin again. Shortly after the tweet was shared, Bitcoin rose by 3% to over $55,000.

In this study, it is shown through tweet examples how Elon Musk mobilizes the masses with his posts on social media and how he affects the cryptocurrency market. The subject discussed in the study was Elon Musk’s role and influence in directing the cryptocurrency market via Twitter in the context of digital opinion leadership.

Elon Musk’s posts on social media cause sharp fluctuations in many products in the financial market, including his own company’s shares.

A Practical Example: The Musk Effect And The Cryptocurrency Market

Since Elon Musk’s tweets affect the cryptocurrency market so much, the term “Musk Effect” is used to express this situation. Since this effect started to show itself, especially in 2021, within the scope of the article, cryptocurrency tweets between January and July 2021 were examined and evaluated in two stages content analysis and discourse analysis. 

In this context, the content and presentation style of Elon Musk’s cryptocurrency tweets are quite interesting. Musk, who has managed to attract attention by sharing mostly minimalist posts, can mobilize the masses with his posts, which often consist of a single word or a few dictionaries, sometimes just an emoji or an image.

Although Musk sometimes states that his tweets are meant as a joke, it can be measured by the fluctuations in the cryptocurrency markets that he is taken very seriously by his followers.

It was observed within the scope of the research that Elon Musk, who has a great impact, especially on cryptocurrency pricing with his messages, expressed his love for cryptocurrencies in his tweets, led by Bitcoin in the first quarter of 2021, while his posts about Dogecoin, another favorite of his, increased in the second quarter. Although Elon Musk is not entirely responsible for the price movement, it is possible to say that each of his statements contributes to a partial impact on the cryptocurrency market.

See you in the next post,

Anil UZUN