The Hashtag is Mightier Than the Sword. How a Tweet Can Move Markets
Welcome to another week in trading! In today’s article, we’re taking a look at the power of tweets. How 280 characters (often a lot less, in fact) can move markets. We’ll also let you know what key events to look out for this week.
A little birdie told me…
When Donald Trump left the Oval Office more than a few investors likely jumped with joy, feeling safer in the knowledge that such a high-profile figure would now have to put down his phone and log out of Twitter.
At times, Trump’s online outbursts had a huge impact on the markets. The social media platform has often been utilised by politicians to share their thoughts, but this was another level.
Bloomberg went so far as to keep a running tally of Trump’s economy-related tweets and tied them to the daily performance of the Dow Jones Industrial Average, and it was constantly updated in real time. JPMorgan also invented the Volfefe Index to measure the impact of the former POTUS’ tweets on the stock market.
Yet, when Trump was forced to hang up his Twitter account (or stopped paying an agency to manage it!) it didn’t take long for another anti-establishment hero to step forward.
Elon’s Electric Tweets
Elon Musk has been busy lately, and not just in the Tesla boardroom. He’s actively engaging in market-moving tweets on an almost daily basis right now. Here are just some of his recent market movers.
1. Signal
On the 7th of January, Musk ambiguously tweeted the words “use signal”, referring to Signal, the encrypted messaging service and app, a potential alternative to WhatsApp.
Investors then proceeded to pour money into Signal Advance, a technology component manufacturing company, that is absolutely not the Signal app that Elon was referring to.
At its peak, the wrong company’s stock jumped 6,350%!
Source: Google
2. Bitcoin
Musk was also a major driving force behind the recent bitcoin pump which boosted the cryptocurrency by 17% in a matter of minutes. What did he do to move the needle by that much? He simply added “#Bitcoin” to his Twitter bio. Yeah.
Source: Coinmarketcap
3. Doge Coin
Source: Twitter
Just last week, he was at it again, Tweeting a reference to the popular “meme” coin, Dogecoin. This simple tweet made the cryptocurrency explode, jumping from 0.039 USD to 0.057 USD, a 46% rise in just over an hour. Oof!
Source: Coinmarketcap
Is this okay?
It’s clear to see that when influential people tweet very specific things, the markets can move. But is it right?
A lot of people have spoken out about it. Ex-Googler Rich Pleeth, an entrepreneur and tech investor in London said that Musk could “enrich himself with one tweet.” He also highlighted that Elon was “an innovator but that doesn’t mean he’s above the law.”
Trump was very publicly blocked from social media toward the end of his tenure as POTUS, but that was not moving markets. In 2018, Musk got into trouble with the SEC for tweeting about Tesla’s stock value, but nothing really came of it.
Right now, the law is playing catch-up to things like this. The SEC is there to keep markets rational and fair. It’ll be interesting to see how long they tolerate Musk’s latest outbursts for. We surely haven’t seen the last of them.
What’s on the trading agenda this week?
Here’s everything you need to keep track of this week, it’s not going to be terribly busy (unless Elon has something to tweet of course!).
Monday 8th February
No major events scheduled.
Tuesday 9th February
No major events scheduled.
Wednesday 10th February
● CNY — Inflation Rate YoY (JAN)
● USD — Inflation Rate YoY (JAN)
Thursday 11th February
No major events scheduled.
Friday 12th February
● GBP — GDP 3-Month Avg (DEC) + GDP YoY (DEC)
● USD — Michigan Consumer Sentiment Prel (FEB)
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon!
The Contentworks team
