Social Media × Crypto Prices - How are they related?

What’s the first thing you do at the beginning of the day? The first thing many people do is look at their phone. How many people liked my post while I was sleeping? What are my friends up to today? How about a few fun TikTok videos before you start your morning work?

Nowadays, social media plays a huge role in our daily life. We use social media to connect with friends and family, get news, or pass the time. If something isn’t trending on social media, we wonder, did it really happen? Jokes aside, you probably already know that social media has reached new heights of influence, and now we can say that it even affects the price of cryptocurrencies.

This influence begins with forums discussing the origins of cryptocurrencies. Cryptocurrencies are now making headlines on popular social media apps. With popular cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) regularly hitting price highs, it is not hard to believe that these digital currencies have become a hot trend.

The complex relationship between social media and the cryptocurrency space

Before social media flourished like it does today, content creators weren’t rewarded much. Sure, social media platforms make a profit, but the creators themselves don’t get much from their hard work and creation. This makes cryptocurrencies very attractive to content creators, and it provides another avenue for their efforts to be rewarded.

Now, let’s fast-forward into a new era where social media is much more powerful in society today. Today, social media is a double-edged sword that can both drive and hurt the price of cryptocurrencies. Social media has this power because it paints the image of cryptocurrencies to the masses. If the image is positive, it will make the price go up. If the image is negative, the price will fall. In other words, social media has the power to control investor sentiment. When you factor in the high volatility of cryptocurrencies and the high usage of platforms like Facebook, Instagram, Twitter, and TikTok, you can see the important role that social media plays.

The power of trend

In July 2020, the price of Dogecoin (DOGE) saw a strange spike due to a trend led by TikTok. A user named jamezg97 uploaded one of the earliest videos of Dogecoin on TikTok, which eventually caused its price to soar. This is definitely one of the weirder cryptocurrency trends of 2020, but it clearly demonstrates the true power of social media in this space.

A recent case comes from Tesla and its founder Elon Musk. In early February 2021, electric vehicle and clean energy company Tesla announced that it had purchased $1.5 billion worth of bitcoin. The company said the acquisition was to add “more flexibility to further diversify and maximize its cash returns”. In addition, they said the company would accept bitcoin for its products, the first major automaker to accept bitcoin for payments.

Since then, the price of bitcoin has hit an all-time high, breaking the $44,000 mark for the first time. At one point, Elon Musk caused a market craze by adding “#bitcoin” to his Twitter profile. As we all know, the price of Bitcoin eventually reached an all-time high of $58,000 and continued to shock the world…until Elon Musk stepped in again.

Elon Musk once became the world’s richest man by acquiring a large amount of Bitcoin. At the time of writing, however, he has fallen from the richest man’s seat. You might be thinking: what the hell happened? In fact, he tweeted about the rising prices of Bitcoin and Ethereum, saying they “seem to be really high.” After the tweet, the price of Bitcoin fell immediately.

We cannot infer that this tweet was the only reason for Bitcoin’s subsequent decline. But so far, we have a hard time believing that this is just a coincidence.

Dogecoin’s surge and Elon Musk’s move are prime examples of how social media can influence investor sentiment and, in turn, cryptocurrency prices. There may be other factors, but social media is probably the most obvious of them all.

Most important part

Overall, the point we want to make is that social media is very powerful. However, we must keep in mind that tweets or Tiktok videos may be part of a scheme to inflate the price of cryptocurrencies. But we must acknowledge the true power of social media and accept that whether a post is good or bad, it has the potential to have an impact on the market.

To sum up, due to the promotional power of social media, we believe it will play a huge role in the maturity stage of cryptocurrencies. Now, there are social media accounts dedicated to educating people about the wonders cryptocurrencies can bring to the world. In the cryptocurrency space, education is the most important part. The number of social media groups and channels dedicated to this space is staggering, and we look forward to seeing it continue to thrive.