The SpaceX and Tesla CEO is all the rage in the crypto world today, considering he is an avid supporter of the technology and wants to do more for crypto investors worldwide. It is also crucial to note that his tweets have influenced the market tremendously, causing the price of Bitcoin to increase and decrease based on what he wrote in it.
With over 55 million Twitter followers, Elon Musk is now dictating the market trends in the cryptocurrency regime with his tweets. Much like modern gen-Z relationships, his relationship with cryptocurrency has been a complicated one. First, he loved them and even declared that Tesla would accept Bitcoin as a payment method.
However, immediately after he made this announcement, Elon had a change of heart, and he ditched it entirely. But, unlike ghosting his lover, he gave a reason for dumping it in front of the world. According to the millionaire, mining cryptocurrencies leaves a considerable carbon footprint making the practice terrible for the environment.
However, you might ask how much did Elon Musk invest in Bitcoin in the first place. Because soon after he made the statement publicly, the price of Bitcoin plummeted, and he tweeted diamond hands (referring that he is holding onto his investment) to boost investor morale and confidence.
However, instead of blaming the market rundown on Elon’s fickle stance, analysts believe that the market was overbought at the time Bitcoin touched its highest-ever price. As a result, it needed to correct itself, and Elon’s tweet only acted as a catalyst to something that would have occurred naturally either way. Click here to begin your cryptocurrency trading journey and to know more about the industry.
So what is Elon’s deal with cryptocurrency exactly?
The love affair began in 2014 when Elon first tweeted that Bitcoin could probably be a good thing for society and the changing landscape in the payments regime. Soon, there were rumors that he was Satoshi Nakamoto, the founder of Bitcoin. To all those who do not know, Satoshi Nakamoto is a mysterious figure as the person (if they exist) hasn’t come forward yet and identified themselves.
As a response to the wild rumors, the SpaceX CEO tweeted, “Not true.” He even wrote that a friend of his had sent him a part of BTC a few years ago which he doesn’t even know is kept where now. However, by 2019 things were looking upward, and the situation had taken a better turn, and Elon looked more committed to venture into the industry.
As a result, the entrepreneur started gauging the technology’s potential to be applied in various business models and became a fan. Amidst all this, several companies, including Microstrategy and Square, came forward to invest in Bitcoin as a hedge against inflation. In a further twist, Tesla declared that it bought Bitcoins worth $1.5 billion, sending the market into haywire.
Soon after this was announced, the crypto market reacted positively, pushing Bitcoin to an all-time high of $58,000. It happened probably because earlier, the crypto market was not viewed in a credible light. However, the minute an institution like Tesla backed it, it helped the market soar to an all-time high, with Bitcoin and other altcoins valued at their highest price ever.
Musk changed his mind
As the events transpired, Musk saw his actions being lauded by the crypto community worldwide. However, in April, Tesla decided to sell 10% of its Bitcoin holdings. This created a panic among investors who started selling their respective holdings, creating a situation of mass dump in the market. Nonetheless, Elon tweeted that he only sold a portion of the company’s holdings to test the coin’s liquidity in the market and that his personal investment was safe.
Elon, who once announced Tesla would be taking payments in Bitcoin, broke the hearts of millions of people globally when he went on a public forum and called out the inefficiency of Bitcoin mining. He even went on to say that Bitcoin mining was terrible for the environment, and in light of this, Tesla will no longer accept Bitcoin in return for its cars.
Soon after this went public, the market went into a downward spiral, and Bitcoin, which was earlier valued at $58,000, fell $30,000 in its value. However, he was further questioned about his stance on crypto. As a response to it, he said the true battle is between fiat and crypto. And, if it were up to him, he would support the latter any day.
Do his tweets hold power to move the market?
You might wonder whether his tweets have the power to sway the market. The answer to this question is, to some extent, yes. However, if you would analyze the market more deeply, you would realize that it suggests otherwise. As an informed investor, you can divide the price cycle of an investment into four phases – accumulation, markup, distribution, and markdown. All assets go through these four phases since it is vital for their growth and sustenance in the market.
As a result, when the crypto market saw its rosy phase towards the end of 2022, it was going through its accumulation phase. It is the scenario where several investors enter the market and pledge their funds. However, towards mid-February, the assets marked up and reached an all-time high. Once the $60,000 figure was achieved, then began the distribution phase since the RSI indicator represented an over-purchasing of the asset, slowly triggering a markdown.
The market meltdown has hurt several investor sentiments globally. However, please don’t link to Musk’s tweets as they were nothing but timed strategically. To give this argument a broader perspective, if you analyze the historical prices of BTC over the years, you will notice a steep decline in its price already even before Tesla made the announcement.
Elon Musk might be the most rad CEO on this planet, but it is far from true that his tweets have the magic to run the market up and down. Nobody has enough power, and cryptocurrencies propagate a decentralized system. Therefore, it would be far worse if they succumbed to the tweets of a man.