Islam_Ambassada
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WHY DOES JUST A TWEET FROM TRUMP,ELON OR CRYPTO INFLUENCERS PUMP OR DUMP CRYPTO.
Many of my followers have been asking why a single tweet from an influencer can have a major impact on the market.
Because I value your questions, I’ve put together a clear and detailed explanation to address all doubts and enhance your understanding.
Take your time to read and grasp the insights, and if you find them helpful, feel free to share!
Real-Life Example: Imagine a Popular Market Vendor
Think of a popular market vendor in your community who sells tomatoes. Everyone knows this vendor because they’ve been in the market for years, and their tomatoes are always fresh and affordable. Now, imagine one day, the vendor loudly announces:
"Tomatoes will be scarce next week because of heavy rains destroying the farms! Stock up now before prices go up!"
What happens next?
1. Immediate Reaction: People in the market panic and rush to buy as many tomatoes as they can. They don’t want to run out or pay higher prices later. This sudden increase in demand causes the price of tomatoes to go up immediately.
2. Hype Builds: As more people hear about the potential scarcity, even those who don’t need tomatoes right now start buying them. Some might even buy extra to resell at a higher price later. This drives the price up even more.
3. Long-Term Impact: If the vendor’s prediction turns out to be true (rains really did destroy the farms), the price of tomatoes stays high because there’s a genuine shortage. But if the vendor was wrong and tomatoes are still plentiful, the price might drop back to normal once people realize there’s no real scarcity.
How This Relates to Markets and Tweets
Now, let’s apply this to Bitcoin or altcoins:
1. Influential Person Tweets: When someone like Elon Musk or a government official tweets about Bitcoin, it’s like the tomato vendor announcing a potential scarcity. Their words carry weight because people trust their influence.
- Example: "Bitcoin is the future of money! Governments are adopting it!"
2. Market Reaction:
- Immediate Reaction: Traders and investors rush to buy Bitcoin, fearing they’ll miss out on a good opportunity. This increased demand causes the price to go up (pump).
- Hype Builds: As more people see the price rising, they also jump in, hoping to profit. This further drives the price up.
- Long-Term Impact: If the tweet aligns with real-world developments (like actual government adoption), the price might stay high. But if it’s just hype with no real backing, the price could drop later (dump).
Why Does This Happen?
- Trust in Influence: Just like people trust the tomato vendor’s announcement, they trust influential figures’ tweets.
- Fear and Greed: People act out of fear (of missing out or losing money) or greed (wanting to make quick profits).
- Speculation: Many traders act quickly on news or tweets, hoping to profit from short-term price movements.
📝 note 📌⬇️
A single tweet can act like the tomato vendor’s announcement—sparking a chain reaction of buying or selling. However, the long-term impact depends on whether the tweet aligns with real-world fundamentals. For beginners, it’s important to understand that tweets can cause short-term volatility, they don’t always reflect the true value of an asset.
I hope you have understood 😊❤️ now..kindly like 👍 comment and share 📌 and make sure you are following me so that you don’t miss any update ❤️
Because I value your questions, I’ve put together a clear and detailed explanation to address all doubts and enhance your understanding.
Take your time to read and grasp the insights, and if you find them helpful, feel free to share!
Real-Life Example: Imagine a Popular Market Vendor
Think of a popular market vendor in your community who sells tomatoes. Everyone knows this vendor because they’ve been in the market for years, and their tomatoes are always fresh and affordable. Now, imagine one day, the vendor loudly announces:
"Tomatoes will be scarce next week because of heavy rains destroying the farms! Stock up now before prices go up!"
What happens next?
1. Immediate Reaction: People in the market panic and rush to buy as many tomatoes as they can. They don’t want to run out or pay higher prices later. This sudden increase in demand causes the price of tomatoes to go up immediately.
2. Hype Builds: As more people hear about the potential scarcity, even those who don’t need tomatoes right now start buying them. Some might even buy extra to resell at a higher price later. This drives the price up even more.
3. Long-Term Impact: If the vendor’s prediction turns out to be true (rains really did destroy the farms), the price of tomatoes stays high because there’s a genuine shortage. But if the vendor was wrong and tomatoes are still plentiful, the price might drop back to normal once people realize there’s no real scarcity.
How This Relates to Markets and Tweets
Now, let’s apply this to Bitcoin or altcoins:
1. Influential Person Tweets: When someone like Elon Musk or a government official tweets about Bitcoin, it’s like the tomato vendor announcing a potential scarcity. Their words carry weight because people trust their influence.
- Example: "Bitcoin is the future of money! Governments are adopting it!"
2. Market Reaction:
- Immediate Reaction: Traders and investors rush to buy Bitcoin, fearing they’ll miss out on a good opportunity. This increased demand causes the price to go up (pump).
- Hype Builds: As more people see the price rising, they also jump in, hoping to profit. This further drives the price up.
- Long-Term Impact: If the tweet aligns with real-world developments (like actual government adoption), the price might stay high. But if it’s just hype with no real backing, the price could drop later (dump).
Why Does This Happen?
- Trust in Influence: Just like people trust the tomato vendor’s announcement, they trust influential figures’ tweets.
- Fear and Greed: People act out of fear (of missing out or losing money) or greed (wanting to make quick profits).
- Speculation: Many traders act quickly on news or tweets, hoping to profit from short-term price movements.
📝 note 📌⬇️
A single tweet can act like the tomato vendor’s announcement—sparking a chain reaction of buying or selling. However, the long-term impact depends on whether the tweet aligns with real-world fundamentals. For beginners, it’s important to understand that tweets can cause short-term volatility, they don’t always reflect the true value of an asset.
I hope you have understood 😊❤️ now..kindly like 👍 comment and share 📌 and make sure you are following me so that you don’t miss any update ❤️
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
