Whether intentional or not, Elon Musk has emerged as a significant figure in the cryptocurrency world. His lifelong prominence in the technology sector as well as his relative recent acquisition of Twitter has allowed him to leverage his voice to impact crypto prices with a single tweet. During previous cycles, Musk’s comments frequently caused instant and major price shifts, highlighting the power public figures like him can hold over volatile markets. As the cryptocurrency industry matures, it is interesting to dive into how Musk has historically and currently played a role in crypto developments despite not directly being involved in blockchain development himself. He has widely been seen as a bullish figure within crypto, but in the long run will it be beneficial to the space for any entity to be able to sway price without actually purchasing or selling tokens themselves?
Historical Relationship between Elon Musk and Crypto
On January 29, 2021, Elon Musk unexpectedly changed his Twitter bio to "#bitcoin. Within hours of this change, Bitcoin’s price surged from around $32,000 to over $38,000, adding $111 billion to its market capitalization. It was an initial sign of the business mogul’s sway over crypto enthusiasts, especially since many at the time hoped he would become a full-on advocate in the vein of Michael Saylor. Over the course of that year, Musk would make the following high-impact announcements:
- On February 4, 2021 Musk tweeted a series of messages expressing his affection for DOGE, causing its price to soar nearly 10% within an hour and over 50% by the end of the day.
- On March 24, 2021 he announced that “You can now buy a Tesla with bitcoin.” This propelled BTC to new highs, with the price nearing $65,000 within one month.
- Conversely when Elon reversed his position on May 12 and stated that Tesla vehicles could no longer be purchased with Bitcoin, the price of $BTC declined from $56,800 to $49,500.
- On December 14, 2021 Musk revealed that Tesla would trial accepting DOGE for merchandise, catalyzing a 43% price increase in the following two hours.
More recently, Musk’s influence was on display again and even reached an Ethereum layer 2 project - namely the Optimism. In November 2023, Musk tweeted, “Optimism is always better,” which many investors took as a nod of support toward the OP token. Consequently, OP’s price jumped by over 12% within hours of the tweet. Although most would interpret Musk’s comment as purely philosophical with no relation to the cryptocurrency, merely mentioning “optimism” was enough to trigger a market reaction.
What Musk’s Influence Means for Cryptocurrency
Musk’s sway over certain cryptocurrencies extends beyond purely market effects to reach the level of wider societal impacts. The rise of digital currencies has fueled conversations about financial inclusivity, decentralization, and the future of money. Cryptocurrencies present an alternative to traditional banking, granting individuals access to financial services without relying on centralized institutions.
This financial democratization aligns with Musk’s vision of a more open, interconnected world. By supporting crypto and blockchain in general, Musk advocates for not only technological progress but also increased financial independence. As crypto continues to fight for mass adoption and gets used by more and more people, the potential for economic empowerment expands.
In addition, the environmental impact of cryptocurrency mining has drawn some attention, especially due to Musk’s professed concerns over Bitcoin’s carbon footprint. This has spurred interest in sustainable options like Ethereum 2.0 and other eco-friendly cryptocurrencies. As the market advances, figures like Musk are making investors become more mindful of the environmental effects of their choices, driving demand for greener cryptocurrency options.
Looking Ahead - D.O.G.E.?
Following election night 2024, Dogecoin price spiked over 25% to roughly $0.2068. This sudden swing can almost solely be explained by Donald Trump’s victory in the U.S. presidential race by surpassing the 270 electoral vote threshold. Trump, often seen as a pro-crypto candidate, has indirectly contributed to Dogecoin’s rally, which is also linked to Elon Musk’s vocal support for both Dogecoin and Trump. Analysts believe a Trump victory could be positively received by the crypto community, partly due to his recent proposal to create the Department of Government Efficiency (D.O.G.E.), which he plans for Musk to lead if elected. This move could increase Musk's influence in the crypto sector, potentially driving more interest in Dogecoin.
In August of this year, Elon Musk initially joked online that he would lead a U.S. government office called the Department of Government Efficiency (D.O.G.E.) if Trump were to secure a second term. This simple remark sparked the launch of a new meme coin centered around this theme - D.O.G.E. - which surged by 75% following the election results. Now both the D.O.G.E. meme coin and original Dogecoin are benefiting from Musk’s perceived involvement in Trump’s second administration. Within the past month alone, Dogecoin has risen by 84%, reflecting a 200% increase over the past year.
When taking all the data into consideration, Musk can be seen as a general positive force for crypto, if not on the technology side at least on the price side. However, his continued influence may be perceived as a sign of an immature asset class because coins like Dogecoin experience massive price swings based on the actions of someone who is not directly involved in the project at all. For speculative investors tracking the declarations and actions of Elon Musk should still prove to be a fruitful endeavor to make certain trading decisions, but the wider blockchain space has also developed beyond the influence of any single individual.
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