Can Elon Mask's Twitter Posts About Cryptocurrencies Influence Cryptocurrency Markets by Creating a Herding Behavior Bias?

Abstract

The main purpose of this study is to examine the effects of Elon Mask's Twitter posts about cryptocurrencies on cryptocurrency markets within the scope of herding behavior bias. For this purpose, the daily price values and transaction volumes of Bitcoin and Dogecoin are analyzed by applying the EGARCH models. The results show that Elon Musk's positive Twitter posts increase dogecoin's volatility more than bitcoin in terms of price and trading volume. In addition, the effect of positive tweets has been found to increase Bitcoin and Dogecoin prices and their market transactions. According to the results, while negative tweet sharing negatively affects bitcoin returns, it manifests itself with an increase in volatility after a certain period of time. Another result is that the Dogecoin return and negative tweet interaction vary according to time intervals, but the presence of the effect on volatility cannot be determined. It is also concluded that after the negative tweet, both bitcoin and dogecoin transaction volumes increased in the first days, but their volatility was not affected. The results are important in terms of showing the effects of an influential person's social media posts on the financial markets by creating a herd behavior effect. Revealing the "influential person effect" as a behavioral finance bias is seen as the originality of the study. It is thought that the findings can be evaluated in terms of pointing out a factor that may pose a potential risk to financial stability in the global sense.

Google Trends and cryptocurrencies: a nonparametric causality-in-quantiles analysis

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Fundamental Analysis of Cryptocurrency Price Fluctuations; A Socio-Economic, Political and Psychological Approach

“…Thus, some influencers try to play the perception of the cryptocurrency market with pump signal efforts. This is in line with the findings Hamurcu (2022) that Elon Musk's positive tweet regarding the Dogecoin token was able to boost the price of Dogecoin. This confirms that the effect of personal postings made by influencers on social media is able to influence the Dogecoin market, so that the interest of buyers to buy the token is higher.…”

Grado de riesgo en el uso de criptoactivos para usuarios sin un nivel de educación especializado en el ramo: aspectos a priorizar en la mitigación

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