Cryptocurrency values fluctuate when Elon Musk tweets

Elon Musk, serial entrepreneur, at TED2013: The Young, The Wise, The Undiscovered. Wednesday, February 27, 2013, Long Beach, CA. Photo: James Duncan Davidson
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Elon Musk’s Impact on Bitcoin Price

The crypto market moves in lockstep with Elon Musk’s tweets. The billionaire and Tesla CEO has also been tweeting a lot about cryptocurrency, pushing the price of bitcoin and dogecoin up and down in less than 280 characters

Musk’s tweets, though not strictly posted for financial benefit, have a significant impact on bitcoin investors. They also raise concerns about the stability of a market that is so quickly affected, especially as retail investors rush to cryptocurrencies in greater numbers. Coinbase, a cryptocurrency exchange platform, became the first major cryptocurrency startup to go public in the United States in April

Musk’s cryptocurrency comments in recent weeks have had a significant impact on bitcoin. Musk announced in May that Tesla would no longer take bitcoin as payment due to environmental worries about the company’s high energy consumption, reversing a two-month acceptance of the leading cryptocurrency. As a result, bitcoin’s price has decreased by roughly 15%

Musk claimed Tesla might sell its cryptocurrency assets — or may have already done so — in response to a tweet from someone with the handle @CryptoWhale a few days later. Bitcoin’s price fell to its lowest point since February as a result of the tweet

Musk remarked on May 17 that Tesla hasn’t sold bitcoin in a while, which seemed to stem the decline and keep prices around $45,000

A week later, Musk appeared to try to address the issue of bitcoin’s environmental impact, calling North American bitcoin miners’ intention to report renewable consumption “very encouraging.” The price increased by 4% as a result

Musk didn’t stop there: on June 3, he shared a meme about bitcoin’s breakup. Since then, the price of bitcoin has dropped 5%, marking the latest in Musk’s month-long rout of the cryptocurrency

Musk’s cryptocurrency tweets aren’t only about bitcoin. After tweeting that he was working with dogecoin developers to increase the currency’s efficiency, the SpaceX CEO propelled dogecoin values up 30% in May. Later in May, a similar tweet led dogecoin prices to surge as well. SpaceX announced earlier this month that the meme-inspired coin would be accepted as payment for flying payloads to the moon. Th

All of this is to argue that Musk’s tweets have a significant impact on cryptocurrency values. Here’s how his tweets compare to the price of bitcoin over the last few weeks :

According to Galen Moore, head of data and indexes at CoinDesk, “there’s little doubt after this weekend’s price action that a tweet from Elon Musk can change the price of bitcoin.” “Understanding memes and the social layer is just as crucial in cryptocurrencies as understanding the technology and game theory that make bitcoin a secure network “

 He went on to say, “It also raises unsettling considerations regarding pricing manipulation.”

Tesla bought $1.5 billion in bitcoin in February, helping to push prices to a new high. According to Tesla’s first-quarter earnings report, the company sold around 10% of it for $101 million. Tesla was able to make a record profit thanks to the sale. Tesla did, in fact, make more money selling bitcoin than automobiles

Apart from what he’s said in tweets, we don’t know if Musk, one of the world’s wealthiest men, is buying or selling bitcoin as a result of his comments. Bitcoin and other cryptocurrencies are not subject to US securities legislation and are subject to less regulation than equities. The Securities and Exchange Commission (SEC) issued a warning on May 11 about the “lack of oversight and potential for fraud or manipulation” in the financial markets

After Musk tweeted that he had “financing secured” to take Tesla private at a substantially higher share price, the SEC fined Musk and Tesla $20 million each in 2018. There was no money in the bank. Musk was required by the settlement to have Tesla lawyers review market-moving tweets, something he hasn’t done

Musk’s bitcoin tweets are less risky than boosting the stock price of his own company, but it doesn’t seem fair that one person can influence the price of bitcoin with a single tweet

Speaking of fairness, Musk isn’t the only one who may profit from his crypto tweets. In the last six months, Musk impersonators defrauded consumers out of $2 million, according to the Federal Trade Commission

Musk’s power over the crypto markets appears to be so strong that it extends to imitators as well. And we shouldn’t anticipate Musk’s disproportionate effect on cryptocurrency values to fade very soon: Cryptocurrencies are becoming more mainstream, and Musk’s fortune is expanding.

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