Elon Musk Is a Crypto Fan. What the Twitter Deal Means for Bitcoin and Dogecoin

Elon Musk Is a Crypto Fan. What the Twitter Deal Means for Bitcoin and Dogecoin

The crypto world is buzzing about Elon Musk's $44 billion purchase of social media site Twitter. It might have far-reaching consequences for digital assets.

Musk, the billionaire CEO of Tesla, has long been a vocal supporter of cryptocurrencies - and he's put his money where his mouth is. Tesla confirmed last year that it purchased Bitcoin, and the electric car company had $1.3 billion in digital assets on its books as of the end of March. SpaceX, Musk's aerospace firm, also owns Bitcoin.

The crypto community, which is particularly active on Twitter, has been replete with conjecture about how Musk's leadership may transform and promote digital assets.

"Musk's takeover has definitely sparked the interest of crypto investors and aficionados," said Strahinja Savic, head of statistics and analytics at crypto derivatives business FRNT Financial.

Musk may make a huge step by urging Twitter to purchase Bitcoin as a treasury asset, as he has done with Tesla and SpaceX. "Given Twitter's presence in US politics and society, the firm acquiring Bitcoin to store on its balance sheet would be a significant event," Savic added.

Scooping up potentially billions of dollars worth of Bitcoin might also have an influence on pricing. In 2021, Twitter's finance head stated that investing in cryptocurrency "doesn't make sense right now."If Musk changes up management, that viewpoint may alter.

There's also the issue of Dogecoin, which increased by more than 30% on news of the Twitter agreement. Dogecoin, a meme coin (so-called since it is based on an online joke rather than a substantial blockchain project), is the cryptocurrency most linked with Musk, who has played a vital role in its ascent.

"SpaceX is going to place a literal Dogecoin on the literal moon," Musk tweeted in April 2021, when Dogecoin was trading for 5 cents. Prices subsequently rose to as high as 75 cents, with dogecoin trading at around 14 cents on Wednesday.

According to Marcus Sotiriou, an analyst at digital asset broker GlobalBlock (BLOK.Canada), the Twitter deal "has led to speculators buying Dogecoin due to Elon's obsession with the cryptocurrency, and thus the potential for Dogecoin to be given more utility on one of the largest social media networks if Elon is successful."

Sotiriou predicted that Musk would integrate cryptocurrency payments into Twitter in some form. Late last year, Twitter introduced a tipping mechanism that allows users to donate Bitcoin to authors, while Tesla began taking Dogecoin for product sales on its website in early 2022. Dogecoin holders may be expecting more of the same from Musk's Twitter.

More generally and fundamentally, the crypto world is closely monitoring how a reinvented Twitter may play a role in broader decentralization initiatives. Bluesky, an internal Twitter initiative launched out of the firm, is in the spotlight with the goal of developing a decentralized standard for social networking. Another crypto supporter on the board is Twitter co-founder and former CEO Jack Dorsey.

Michael Saylor, an ardent Bitcoin supporter whose business MicroStrategy has been at the forefront of crypto adoption, stated on Twitter on Tuesday that the social media platform could potentially use cryptocurrency to alleviate the problem of fraudsters and spambots.

Musk has stated that one of his top goals is to remove 'bots' off Twitter. Saylor recommended that people send some Bitcoin over the Lightning network as a security deposit in order to obtain some type of Twitter verification.

In any case, the crypto community is optimistic that Musk's leadership of Twitter will lead to more acceptance of Bitcoin and other digital assets.

"All you can do with Twitter is share information, but if you can integrate means to move value in order to pay for products and services on the network, that's a huge game shift," Sotiriou said. "The more users you attract to your network, the more prices you'll be able to charge, as well as the real value that's being moved."

And Musk stands to benefit from the rise of cryptocurrency, disclosing in March that he personally owns Bitcoin, ether, and Dogecoin — and has no plans to sell. "He would have some type of personal motive" to continue using cryptocurrency, according to Savic. "He has stated unequivocally that he does."

Meanwhile, market participants believe the rich executive will continue to generate large fluctuations in cryptocurrency prices.

According to Pat Larson, CEO of crypto tax software ZenLedger, "millions of retail crypto investors follow his every word and meme." "Elon's voice is bigger than the voices of large cryptocurrency firms like Coinbase, Robinhood, and FTX, who all spend billions on consumer marketing each year."