Writer: Altin G.
On October 30, 1938, a radio adaptation of H.G. Wells’ “War of the Worlds” caused widespread panic in New Jersey, convincing some that the Earth was under attack, and others to stockpile armaments, indirectly impacting defense and munitions stocks. Fast forward almost a century, and no one should be surprised that a social media platform that catches the attention of hundreds of millions, even billions of more people than that famous radio broadcast can, in fact, directly influence market volatility.
In 2025, it’s no longer speculation or a story; there’s hard research on the topic, and even a newly coined term, Twitter-based market uncertainty (TMU), a measure of market uncertainty derived from analyzing the content of tweets on Twitter. There are even financial experts who claim their forte to be researching social media trends.
As you can no longer deny, there is some gold to be mined in understanding how these platforms, especially Twitter, today’s X, affect the stock and the historically volatile crypto market.
The Power of a Tweet
Why is it always Twitter (now X) that has this power and not other platforms?
The questions can be attributed to multiple reasons, including the platform’s fast-paced and direct nature, as well as the players’ involvement in it. Mainly, though, as with other aspects of finance, one or more famous ‘precedents’ made it the go-to platform.
It’s enough to show one of the many DOGE coin tweets from Musk and how the price jumped up and down in a matter of seconds. The following tweet has garnered over 79 million views, which is more than enough to significantly impact the price of the coin overnight, as it happened in 2021 when a single tweet jumped the price up 67.99%.
Starting to feel like The @DOGE has real potential
— Elon Musk (@elonmusk) November 16, 2024
Even more ironic than a meme coin is the case when Musk tweeted about buying Twitter, and the price of the platform itself became volatile.
There are countless examples of this, and one Student encapsulated it better in his research on the impact of social media on stock prices, by aggregating a total of 26 tweets from Musk, Tyler Win, Klevoss, Jason A. Moser, and Alexandria Ocasio-Cortez, where 11 different stocks and coins were mentioned and found direct links to each to these tweets to the rise or drop on prices; In contrast, stocks were relatively harder to shake.
With them now introducing a couple of different AI companions to choose from, as well as showcasing their latest Super Grok 4 model, it’s no surprise how everything tech related is being broadcasted over their platform.
Simple maths and one student can now prove the power of social media, but let’s go into more specifics on why and how it happens.
Why Is It Always Crypto?
It’s no mystery that Crypto is volatile, and in the case of social media, the cause and effect are felt almost instantly. Just a few months ago, Donald Trump posted this Tweet:
My NEW Official Trump Meme is HERE! It’s time to celebrate everything we stand for: WINNING! Join my very special Trump Community. GET YOUR $TRUMP NOW. Go to https://t.co/GX3ZxT5xyq — Have Fun! pic.twitter.com/flIKYyfBrC
— Donald J. Trump (@realDonaldTrump) January 18, 2025
What happened next is easy to imagine: millions of people closed Twitter, opened their Crypto exchange app, and bought $TRUMP coin. The next day, some of those millions were big winners, but most of them, as with any meme coin, were losers.
The coin reached an all-time high of $75.35 and, in a matter of days, fell to less than 10$. Would that ever have happened if Trump’s reelection hadn’t been the biggest significant topic in the news? Surely not, but what drove the sales was easy; it was for his official account to stir the emotions of millions of followers.
The point of discussing a President’s Meme coin and why Crypto is more volatile and affected by social media is related to one word: maturity. Findings from CEPR suggest that investor emotions play a more prominent role in less mature markets, which is precisely what Crypto is. The story goes deep into outlining that the emotions found to be significant in predicting market movements most often were ‘fear’ and ‘trust’, which align with behavioral finance theory and every marketing and sales book.
Combine all of the above with the catch-up game the economy is doing with technology in everything, and you get the answer on why Crypto is the first one to be easily affected.
Is Wall Street shaken?
Cryptocurrency is a relatively new, unstable, and unregulated asset; anyone with sufficient resources can create their token. However, the Fortune 500, Wall Street and ‘classic’ stocks surely wouldn’t be as volatile as they are on the whim of a digital platform; think again.
Researchers from Hunan University in China, in their paper on Twitter-based market uncertainty, listed three main advantages of using TMU to predict stock market volatility.
First, each tweet is time-stamped and updated in real time; second, the demographics are wider than your normal investment or industry-specific magazine, practically encompassing ‘everyone’ who can buy or sell assets; third, the volume of people and tweets makes it large enough to provide vast data.
The study, interestingly enough, found that even though China doesn’t have direct access to Twitter, the platform’s impact was indirectly felt on stocks there. All the more reasons, as not only this research suggests, to apply TMU in forecast models to lower portfolio risk and boost economic value.
The Nature of Business Has Fundamentally Changed
There are many ways to interpret the quote, ‘Business today is social first.’ You can argue the marketing side of it and derive that a business needs to empower its audience and convey a message, or you can be bolder and simply put it in terms of building an audience first, discovering what they like, and creating a product for them. It’s a simple, modern-day marketing tactic that opposes entirely the industrial era principle of producing first and then trying to sell as much as you can.
With this in mind, it can be argued that those people who run those massive Twitter accounts know precisely what they are causing for their ‘audience. Using the same logic that an influencer on Instagram promotes their new shampoo brand, these accounts fluctuate the price of a coin or stock, some would say, based on their interest.
It’s no longer about selling umbrellas at a high price when it’s raining, but about telling people it’s going to rain next week, so stock up while you can. This brings us to an interesting point about the less-than-glorious side of social media’s influence on markets.
Pick Your Sources of Information Wisely
Returning to the story of the “War of the Worlds” radio broadcast hysteria with another point of view, you could call it the first instance of massively broadcast fake news in real time. This is what the author of the book that analyzed the phenomenon, Brad Schwartz, calls it, while adding a few wise notes.
“One of the lessons I think people can still take away from War of the Worlds,” said Schwartz for Yahoo News,” is to think more carefully about our sources of information, especially with a story like this that seems alarming or feeds into the anxieties of the moment.”
The data suggests that a powerful Tweet can significantly impact the price of a coin and potentially skyrocket the price of a stock. However, there’s nothing that assures what that price volatility will look like or whether it’s wise for you to act on it.
Reality is that all social media channels are packed with a tremendous amount of noise and not enough information to replace actual knowledge and experience. Musk did raise the character limit for X to 280 from 140 in the Twitter days, but it’s hard to imagine that you will find your long-term investment strategy, tailored to your needs, from a billionaire sharing memes.
There is valuable information on social media, and no one can deny it, so factor in the TMU factor in your next moves and don’t just follow ‘Tweets’ on X, but keep a vigilant, analytical eye out there.
