Following yesterday's Elon Musk tweet that skyrocketed the price of a small cap meme coin (BABYDOGE), we wondered how well you'd do if you followed the simple and dumb investing strategy of buying his tweets. Here's a look at two recent meme examples. We'll exclude his Bitcoin and Dogecoin tweets, as he tweets about those constantly.
Elon Musk tweeted a riff on the popular Baby Shark music video, replacing "Shark" with "Doge," indirectly promoting an obscure coin called Baby Doge Coin (BABYDOGE) at 5:24 AM ET on July 1st.
If you bought within 8 minutes of his tweet(!), you enjoyed the coin's first surge of about 60-70%.
If you bought after that, you'd still make decent money depending on when you bought, up to 5 hours later when the price started to turn.
Here's the 24-hour chart:
Acting within 8 minutes of the tweet was easier said than done. Even if you saw it on time, you might have interpreted it as a DOGE tweet and not necessarily a BABYDOGE tweet. If you had bought vanilla DOGE instead of BABYDOGE, you'd have lost money. Also, BABYDOGE is only traded on PancakeSwap, which means you would need funds available there to trade.
Elon Musk tweeted a few emoji to promote an obscure adult entertainment crypto called "CumRocket" at 4:39 AM ET on June 5th.
If you made this connection within 15 minutes, you enjoyed the coin's first surge of 2x+. Most other entrances until the peak about 4 hours later made money too, though you had to sell before the price turned and you couldn't buy the very, very top of the first surge.
Here's the 24-hour chart:
Buying Musk's tweets kinda works, but there are catches
Based on this small dataset, if Elon tweets about a small-cap crypto and you're still reasonably early, within an hour or two, gambling a little money isn't the worst bet. Just don't get greedy and take modest profits (maybe 20-30%) quickly.
Of course, you should be aware that like many things in crypto, there are caveats. For example:
You can't automate buying his tweets. If he tweeted $BABYDOGE it would be easy to setup a program to buy it at the moment of tweet. Instead, he tweets riddles and emoji that need a human's mind to understand (I'm sure that's intentional).
He tweets at odd hours. Even if you setup an alarm to alert you to anything he says, it's likely you'll be waking up in the middle of the night often until something actionable happens.
The data has a margin of error. We used CoinMarketCap for the price analysis, but there is certainly a margin of error between their data and the trading platform's data, so perhaps instead of eight minutes for BABYDOGE, you had five minutes. Also, the data doesn't take into account slippage or that a few giant investors might pay hundred dollars in gas fees to drain liquidity before you get there.
His tweets can be misinterpreted. Remembering those who bought DOGE instead of BABYDOGE yesterday, it's only easy in retrospect to know which coin he'll impact and how big that impact will be.
Rushing = mistakes. When you're full of adrenaline, rushing to get into a trade as fast as possible, it's easy to buy the wrong crypto, set the slippage too high, or enter the wrong address.
At some point the music stops. The hardest part of this strategy is knowing when to sell. Unless you're super early, if you buy and the price falls slightly, you'll agonize over whether it's the big one or if it's just a temporary dip. There are quite a few fake-outs so you'll need some luck too.
It'll keep getting harder. As more people pile into this strategy, supply will be bought up quicker and dumps will become more aggressive. Nothing ever stays static in crypto.
Ultimately, if you saw his meme crypto Tweets exactly on time and made all the right mental connections, it's unlikely you'll see the spectacular gains that media headlines tout; you'll make money but it won't be easy money and there'll be risks involved. Instead, the primary beneficiaries of his tweets are existing holders of the meme coin, which is tough news because there are too many out there to pre-emptively buy.
Personally, I'm going to sit this strategy out.
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