MUSK'S TWEET EFFECT ON BITCOIN AND TESLA PRICES

Abstract

Social media significantly impacts the dynamics and movement of stock and cryptocurrency markets. The perfect market hypothesis assumes that all available information is already embedded in stock prices, meaning that only some announcements will affect the market price of a company's stock. The efficient market hypothesis and anomalies that cause certain deviations apply to both stock and cryptocurrency markets. Social networks like Twitter, Facebook, and Reddit are significant tools for promoting cryptocurrencies. This paper aims to explore the influence of social media on market price movements, using Tesla stock and Bitcoin as examples. The conclusion is that Musk's Tweet Effect demonstrates an anomaly of market overreaction and impacts the price movements of Bitcoin and also of Tesla stocks.